Activist investor Ryan Cohen has taken on the role of CEO at GameStop Corp. in his ongoing effort to revitalize the gaming retailer. This move, while celebrated by Cohen’s supporters and GameStop enthusiasts on social media, has received a more skeptical response from Wedbush analyst Michael Pachter.
Pachter believes that Cohen’s appointment signifies a continuation of the status quo for GameStop, which has been experiencing a decline in physical game sales and foot traffic. According to Pachter, Cohen’s previous initiatives, such as modeling the company after Amazon and attempting to establish an NFT marketplace, have not panned out successfully. Pachter asserts that Cohen lacks any new ideas and has failed to attract competent individuals to join his endeavors.
Cohen initially invested in GameStop through his investment firm RC Ventures in August 2020, which sent the company’s stock soaring. Since then, he has been advocating for a transformation of GameStop with a specific emphasis on digital sales. Cohen joined the company’s board in January 2021 and solidified his power as chairman in June of the same year.
In the official announcement of Cohen’s CEO appointment, GameStop stated that he will not receive any compensation for his roles as president, chief executive, and chairman. Pachter suggests that Cohen’s ascendancy to CEO was expected due to a lack of viable alternatives and speculates that he will remain at the helm for the foreseeable future.
Ryan Cohen Becomes GameStop CEO and Social Media Reacts: ‘Changing the Paradigm on Wall Street’
In a recent note released Thursday, it was stated that GameStop is facing an inevitable demise due to declining physical software sales and the shift towards subscriptions and digital downloads. However, there is potential for the chain to have significant value if managed properly to harvest profits. The key challenge lies in finding capable management to execute such a turnaround.
Despite a request for comment, GameStop has not responded yet. It is suggested that the company should focus on trimming store count, managing costs, and maximizing profits amid ongoing sales declines. Questions have been raised regarding Ryan Cohen’s suitability as CEO, as he lacks significant experience in managing physical retail. Skepticism remains about whether he was the first choice for the position. With the expected transition from physical software sales to digital downloads, some believe that Cohen’s appointment confirms GameStop’s downfall.
While GameStop’s stock initially surged in premarket trades, it dropped by 1.8% on Thursday with higher trading volume than usual. In comparison, the S&P 500 index has experienced a gain of 12.1% in 2023, while GameStop’s stock has declined by 8.8%.
GameStop recently reported better-than-expected second-quarter results, thanks to international sales and a significant software release. The company is also intensifying its efforts to control costs as part of its strategy moving forward.