On Thursday, September 28, GameStop (GME.N) announced the appointment of billionaire Ryan Cohen as both its CEO and chairman, further solidifying the activist investor’s control over the struggling physical video game retailer that he aims to revitalize.
In premarket trading, the company’s shares surged by 10%. The stock has experienced significant volatility since 2021 when retail investors rallied to increase its value in a bid to challenge hedge funds’ pessimistic predictions about GameStop’s future.
Cohen, GameStop’s most significant investor, has served on the board for over two years and took on the role of executive chairman in June following the removal of former CEO Matt Furlong.
GameStop has announced that Cohen will step down from his executive chairman position and will not receive any compensation for his new position.
Cohen joined GameStop’s board after successfully building the online pet products retailer Chewy into a highly successful venture, eventually selling it for $3.5 billion in 2017.
Initially, the billionaire had pushed for GameStop to transition aggressively toward an online-centric business model, especially as the company, heavily reliant on physical stores, sought to rejuvenate its operations.
However, he has revised some of those e-commerce strategies, placing increased emphasis on GameStop’s physical stores and utilizing them as convenient locations for customers to retrieve online orders.
The recent quarterly financial results from the company, released earlier this month, indicated that this approach was yielding positive results. Strong demand for video games, collectibles, and gaming consoles contributed to GameStop reporting a loss smaller than anticipated and surpassing revenue expectations.
However, there are concerns among analysts regarding the sluggish pace of transformation at GameStop and Ryan Cohen’s mixed track record as an activist investor in companies he has targeted, such as Bed Bath & Beyond and Nordstrom (JWN.N).
The company has witnessed a series of executive departures in recent years, including the departure of former Chief Operating Officer Jenna Owens in October 2021, just seven months after her appointment.
Former Chief Financial Officer Michael Recupero, who was brought in around the same time as Matt Furlong, was let go last year.
Since reaching its all-time high in 2021, the video game retailer‘s shares have experienced a decline of more than 80%, including a 7% drop this year.
Reported by Aditya Soni in Bengaluru; Edited by Arun Koyyur