GameStop (GME) announced the appointment of billionaire Ryan Cohen as its CEO and chairman, aiming to bolster its turnaround efforts. Once a staple for gamers, GameStop has grappled with the transition to online downloads, which led to it becoming a focal point of a 2021 tug-of-war between hedge funds and retail traders. Cohen, renowned for building and selling online pet retailer Chewy (CHWY) for $3.5 billion, initially aimed to steer GameStop towards e-commerce. However, he has since adjusted the strategy, leveraging brick-and-mortar locations for online order pickups.
Under Cohen's influence, the company's pivot has shown early signs of success. GameStop's recent quarterly earnings demonstrated the efficacy of this revised approach, as the company reported better-than-anticipated revenue and a smaller loss, driven by robust demand for videogames, collectibles, and consoles. Yet, this change hasn't been without its hurdles. The retailer has witnessed multiple executives exit over the past years, sparking concerns over leadership stability and the company's long-term viability.
The mixed feelings towards Cohen's approach are further compounded by his track record as an activist investor. Despite his success with Chewy, he's had a mixed performance with other companies like Bed Bath & Beyond and Nordstrom (JWN). Analysts express concerns over GameStop's slow transformation pace and the future of physical software sales as digital downloads and subscriptions gain traction.
GameStop's stock performance reflects these apprehensions. The company's shares have plummeted over 80% from their 2021 peak, including a 7% drop this year alone. Following the recent announcement of Cohen's new roles, shares fell by an additional 2%.
