GameStop shares plummet after fifth CEO exit in 5 years

A GameStop store is seen in the Jackson Heights neighborhood of New York City

By Akash Sriram

(Reuters) -GameStop fell about 19% on Thursday and was set for its worst session in two years after the surprise exit of a CEO handpicked to lead its online expansion fanned concerns about the videogame retailer's ailing business.

The ousting of former executive Matt Furlong came alongside top shareholder Ryan Cohen's appointment as the executive chairman of a company that he turned into a favorite of meme-stock traders with promises of a digital pivot.

Yet GameStop was set to erase half of its gains for 2023 and about $1.3 billion in market value, with one analyst saying management change has been the only constant in recent years.

"It's hard to have an opinion with no earnings call, little-to-no investor communication, and lack of consistent strategic vision," Andrew Uerkwitz of Jefferies said.

"One consistency remains, changes at the top. Over the last 5 years, GameStop has had 5 CEOs and 3 CFOs."

Uerkwitz is among the last few analysts who cover GameStop after a massive pandemic-era rally, that was driven by traders banding together on Reddit, prompted several brokerages to say the stock price had decoupled from its fundamentals.

The company's shares have dropped nearly 80% from the $120.75 peak they hit during the meme-stock saga of 2021. The stock has a 12-month trailing price-to-sales ratio of 1.38, compared with Best Buy's 0.37, according to Refinitiv.

GameStop has also struggled to deliver on Cohen's pledge of making it the Amazon of videogame stores, having seen several high-level exits over recent months, including those who were drawn from the Chewy co-founder's personal network.

The videogame retailer, which still relies mostly on brick-and-mortar stores, reported its fourth straight fall in quarterly revenue on Wednesday and a bigger-than-expected loss.

"GameStop is doomed," said Michael Pachter of Wedbush Securities. "The lack of a clear direction and the callous termination of Furlong all but ensures Cohen will have difficulty attracting a qualified replacement."

(Reporting by Akash Sriram and Jaspreet Singh in Bengaluru; Editing by Devika Syamnath and Shounak Dasgupta)