GameStop, the video game retailer whose maniacal stock moves have captivated Wall Street this year, said Wednesday it had enlisted two veterans of Amazon as new CEO and CFO to help it with its digital shift.
Matt Furlong, who recently oversaw Amazon’s Australia business and spent nine years with the company, will take up his role as CEO on June 21, the company said. Mike Recupero, who was most recently the CFO of Amazon’s consumer business in North America, will take up his role as CFO at GameStop on July 12.
GameStop’s action has taken a crazy turn, climbing over 1,500% this year as waves of investors with smaller pockets gathered in hopes that it could turn into an ecommerce powerhouse. after seeing video game sales in its brick and mortar stores the stores falter. Investors have placed much of their hopes on Ryan Cohen, a major investor who co-founded Chewy, the online pet supplies seller.
GameStop said on Wednesday it was still losing money, posting a net loss of $ 66.8 million for its first fiscal quarter, although that was lower than the $ 165.7 million the company lost over the course of the period of last year.
GameStop reported $ 1.28 billion in revenue for the quarter, up 25% from a year ago and beating analysts’ expectations of $ 1.16 billion. Sales increased despite an almost 12% reduction in the number of GameStop stores globally – closures due in part to the company’s ongoing overhaul strategy as well as the COVID-19 pandemic.
Face of the “meme stock” craze
GameStop became the face of the “memes stocks” craze earlier this year, when keen amateur investors encouraged each other to invest in the company’s stocks. This viral approach caused the stock to fly.
Professional investors had sold much of GameStop’s stock “short”, essentially making bets that would pay off if its price fell. They were skeptical of GameStop’s prospect given the migration of video game sales to online channels and away from GameStop stores. But after the stock started to rise sharply, these short sellers had to buy GameStop stocks to get out of their bets, which created a feedback loop causing the stock price to rise further.
The stock hit a closing high of $ 347.51 in late January, but fell back below $ 41 in a matter of weeks. It has since started to climb again and closed at $ 302.56 on Wednesday, although the shares fell to $ 278 in after-hours trading.
Most Wall Street analysts continue to view the company’s high share price as a reflection of investor enthusiasm rather than promising growth.
“The continuous shift in the digital mix and changing consumer preferences (as evidenced by the growth in subscriptions) may make GameStop’s packaged software and pre-owned businesses less relevant over time,” analysts said. Wedbush Michael Pachter and Nick McKay in a note published ahead of the earnings report. “In addition, new consoles from Microsoft and Sony remain limited in supply, while Switch sales will eventually decline as Nintendo has yet to identify a successor.”