By Cecilia D’Anastasio and Edwin Chan | Bloomberg
GameStop Corp. appoints billionaire Ryan Cohen as the new chief executive officer, filling a position that has been vacant since the previous CEO was terminated in June. This move comes as the struggling chain battles declining sales and recent store closures.
In addition to being the executive chairman and largest investor of GameStop, Cohen will take on the roles of chairman and president. He will also continue to be involved in other business ventures outside of the company. It is worth noting that he will not receive any compensation for his new role.
Over the years, GameStop has seen a significant decline in sales, leading to the closure of over 1,000 stores, accounting for nearly 20% of its total. The shift towards online purchases, as opposed to physical game CDs, has been a major contributing factor. In fact, the company’s software sales in the most recent fiscal year were almost 40% lower than in 2019.
Cohen, the co-founder of Chewy.com, revealed his substantial stake in GameStop in 2020 and immediately began working to establish a stronger online presence. His efforts included bringing in executives from Amazon.com Inc. According to a recent filing, Cohen currently holds about 12% of the company’s stock.
GameStop rose to fame as a “meme stock” when Reddit’s WallStreetBets community orchestrated significant fluctuations in the stock’s value, causing it to soar by more than 1,600% in January 2021.
However, since then, the stock has experienced fluctuations and the retailer has faced challenges relating to management turnover and consumers’ preference for online game purchases. The ongoing battle between hedge funds and individual investors in regards to the stock has even been turned into a feature film called “Dumb Money,” currently showing in theaters.
As of 1:23 p.m. in New York, the shares of GameStop were down approximately 1% to $16.99. The company’s market value now stands at approximately $5.1 billion, less than a quarter of its peak value in 2021.
Cohen has already implemented significant changes within the company’s leadership. In June, CEO Matt Furlong was replaced after serving for two years. Furthermore, Chief Financial Officer Diana Saadeh-Jajeh resigned the previous month.
According to insiders, a clash of strategies caused challenges within the company as employees questioned whether the e-commerce executives’ skills were applicable to a brick-and-mortar business. Notably, GameStop had also ventured into digital assets, including NFTs, but decided to withdraw from this initiative due to regulatory uncertainties in the cryptocurrency market.
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