On Thursday morning, GameStop announced that Ryan Cohen, a billionaire activist investor, would assume the positions of Chief Executive Officer, Chairman, and President of the video game retailer with immediate effect. Notably, Cohen will not be receiving a salary for his services. Following the announcement, the company's shares experienced an initial surge in premarket trading, but subsequently fell by over 3% after the market opened. On Wednesday, GameStop's board, with Cohen abstaining, voted unanimously to appoint him as the retailer's top executive. Cohen had previously served as Executive Chairman, but will relinquish this role upon his latest appointment, as per a securities filing. According to a news release, Cohen will not be remunerated for his work.
The decision has been made over three months subsequent to the termination of CEO Matthew Furlong by GameStop. In his place, Cohen has been appointed as the executive chairman, while Mark Robinson, a loyal and experienced member of the company, has been designated as the "principal executive officer" and general manager. GameStop did not provide any explanation for Furlong's dismissal during that period. However, it is worth noting that this action occurred shortly after the company achieved its first quarterly profit in two years under Furlong's leadership.
After a span of several weeks, the company made an official declaration regarding the resignation of CFO Diana Saadeh-Jajeh. In addition to this development, Cohen will now undertake the position of principal executive officer, previously held by Robinson. Cohen had previously served as general counsel and secretary, and in June, he took on the additional responsibility of principal executive officer. However, as per a securities filing, he will now revert back to his original roles as general counsel and secretary.
Cohen, the founder of pet food retailer Chewy and renowned as the "king" of meme stocks, acquired a share in GameStop in 2020 and assumed a position on the board in 2021, coinciding with the peak of the meme phenomenon.
According to FactSet data as of late June, Cohen's firm RC Ventures emerged as GameStop's largest shareholder, holding a 12.09% stake.
Since Cohen's involvement with the company, there have been limited indications of a significant turnaround, although there have been a few exceptions. In recent times, GameStop released its financial results for the second quarter, revealing a narrower loss compared to the previous year and a slight increase in revenue.
On Thursday, GameStop announced the appointment of billionaire Ryan Cohen as its CEO and chairman, further solidifying the influence of the activist investor on the struggling brick-and-mortar videogame retailer, with the aim of revitalizing the company.
In premarket trading, the company's shares experienced a 10% surge. Since 2021, the stock has been subject to significant fluctuations, driven by retail investors who sought to challenge hedge funds' predictions of GameStop's downfall.
Cohen, who has been GameStop's largest investor for over two years, previously served on the board and assumed the role of executive chairman in June following the removal of former CEO Matt Furlong.
GameStop stated that Cohen will relinquish his executive chairman position and will not receive any compensation for his new roles.
Cohen's involvement with GameStop follows his successful establishment of Chewy, an online retailer specializing in pet products, which he sold for $3.5 billion in 2017.
Initially, the billionaire attempted to steer GameStop towards a more online-oriented business model, recognizing the need for the company to adapt from its reliance on physical stores in order to revive its operations.
However, he has subsequently revised his e-commerce strategies, placing greater reliance on GameStop's physical stores and utilizing them as convenient locations for customers to collect their online orders.
The recent quarterly earnings report of the company demonstrated promising indications that this strategy is yielding positive results. The robust demand for video games, collectibles, and consoles contributed to GameStop's ability to report a loss that was smaller than anticipated, along with revenue that exceeded expectations.
Nevertheless, analysts have expressed concerns regarding the sluggish pace of transformation at GameStop and Cohen's track record as an activist investor in the companies he has targeted, such as Bed Bath & Beyond and Nordstrom.
The company has experienced a number of executive departures in recent years, notably including the departure of former chief operating officer Jenna Owens in October 2021, a mere seven months after her appointment.
Furthermore, former finance chief Michael Recupero, who was hired concurrently with Furlong's arrival, was dismissed last year.
The shares of the video-game retailer have witnessed a significant decline in value, surpassing 80% since reaching their peak in 2021, with an additional 7% decrease observed this year.