With GameStop (NYSE:GME) ensconced in a business that looks doomed to contract for the foreseeable future and the company embracing a losing strategy, GME stock looks poised to continue slumping in 2024.

Also importantly, the retailer’s new CEO has little experience when it comes to leading brick-and-mortar retailers. In fact, one such company that took his advice failed spectacularly. Finally, investment bank Wedbush warned that GME is having difficulty recruiting senior executives.

A Continuously Weakening Business and a Poor Strategy

In 2022, GameStop largely gave up its efforts to expand its e-commerce business and move into products other than video games on discs. As a result, GME primarily consists of “its roughly 4,400 bricks-and-mortar stores.” Those stores mainly sell video games on discs. However, the demand for such video games is dropping because more and more consumers are downloading their games instead of buying physical copies.

The retailer’s largest investor, GameStop CEO Ryan Cohen, who became its chairman in June 2021, recognized the problem the firm was facing. After buying his stake in the firm in 2021, he pushed the company to become a huge player in the e-commerce space. But when Cohen’s strategy failed to bear fruit for about a year, the investor and GME decided to abandon the effort.

In recent quarters, the retailer’s strategy has revolved around cutting costs to boost its bottom line. And Cohen seems determined to continue to pursue that strategy. He told GameStop employees in a memo last week to implement “extreme frugality.” As I noted in a previous column, the retailer appears to have even postponed paying many of its bills “in order to temporarily inflate its profits.”

But the strategy is unlikely to prevent GME stock from dropping a great deal further. That’s because the firm has been cutting costs for well over a year and has likely lowered its expenditures as much as possible.

Further, it can’t avoid paying its bills forever, and its revenue will likely sink a great deal due to the reduced popularity of video game discs. Put it all together, and the retailer’s top and bottom lines will probably tumble sooner rather than later, dragging down GME stock further.

Also noteworthy is that analysts, on average, expect the retailer’s sales to fall slightly next year.

Cohen’s Mixed Record and Possible Recruiting Problems

Cohen co-founded online pet-products retailer Chewy (NYSE:CHWY), and he sold it for $3.35 billion in 2017.

But he was not so successful with one of his largest investments in the brick-and-mortar space, Bed Bath & Beyond. After Cohen obtained a 10% stake in the latter retailer for $120 million in March 2022, the company adopted many of his ideas and allowed him to appoint three people to its board.

But Cohen unloaded his shares in Aug. 2022 and is one of the defendants in a $1.2 billion lawsuit by the retailer’s shareholders who have alleged he carried out a “pump-and-dump” maneuver. Bed Bath & Beyond subsequently declared bankruptcy, and last month it was reported that Cohen was being investigated by the SEC over the “ownership and surprise sale of Bed Bath & Beyond shares.”

In a note issued on Sept. 28, investment bank Wedbush reported that Cohen became CEO partially because the company had trouble recruiting “competent executives.” The bank added that Cohen “will have difficulty in surrounding himself with competent colleagues going forward.” Wedbush believes that GME “will continue its path to oblivion,” and it kept an Underperform rating on the shares.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.