Changes are taking place at GameStop (NYSE:GME). Yesterday, the company announced that Chief Operating Officer Nir Patel will be stepping down. Now, news of the departure is pushing GME stock into the red, continuing a losing streak that has dragged on all week.
Of course, it hasn’t been a good month for GameStop already. But now the struggling video game retailer’s growth prospects look even more questionable. GME stock hasn’t caught a break all year and these changes in leadership aren’t likely to fix the major problems dragging down shares.
Should investors turn away from this former meme stock? The truth is GameStop hasn’t been worth betting on in a long time. This development is just the latest in a long line of reasons to find other investments.
What’s Happening With GME Stock?
News of this executive departure sent shares down this morning as markets opened. As of this writing, GME stock is in the red by more than 1% for the day. A rebound isn’t likely, either. While no major management changes have been made yet, GameStop has stated that other members of its team will absorb the responsibilities of the departing COO.
The decision to move forward without a designated COO makes sense for Ryan Cohen. So far, the GameStop Chairman and CEO has not made clear what his vision for the company is, leaving many investors to wonder if he even has one. As it stands, the company is a ship with no clear destination and that should worry investors. But even more worrisome are its troubled financials and distressed balance sheet. As InvestorPlace contributor Joel Baglole reports:
“The company said that its hardware sales, including video game consoles and discs, fell 12% year-over-year (YOY) to $1.09 billion, while its software sales declined 31% from a year earlier to $465 million. GameStop’s sales have steadily decreased as consumers purchase digital game downloads and sales of physical console games deteriorate. As has become customary, GameStop did not provide any forward guidance for the year ahead.”
All this suggests that Cohen is flying blind until he figures out what to do with this troubled company. Much remains uncertain, but one thing is clear: If Cohen doesn’t figure out a course for GameStop to chart soon, the market will decide its fate for him.
Stormy Seas Ahead
For some investors, GME stock will always be a nostalgia play. There are many people who remember the glory days of 2021 when the GameStop short squeeze sent shares to new heights. “But that’s history,” states InvestorPlace’s Louis Navellier. “Investing should be about the present and anticipating the future, and both of those look weak for GameStop shares.”
The departure of GameStop’s COO should remind investors that the company is in a slow race to the bottom. No action so far has helped save it, and that may be because GME is beyond saving. Living in the past is dangerous, even for the most risk-savvy traders.
On the date of publication, Samuel O’Brient 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.
