GameStop Shares Fall As It Terminates CEO

GameStop shares plunged Wednesday after it terminated Chief Executive Matt Furlong and elevated Ryan Cohen to executive chairman, the latest shake-up at the videogame retailer, which has been struggling to find new ways to juice sales, The Wall Street Journal reported.

Cohen first joined the board as director in 2021 and rose to chairman that June as part of a restructuring of GameStop’s board. The company then overhauled its executive team, hiring Furlong from Amazon for the CEO job. 

GameStop shares fell 19% in after-hours trading.

Furlong was one of dozens of e-commerce veterans who joined GameStop in 2021 and 2022 to help turn the company’s business around by expanding online sales and launching a marketplace for non fungible tokens, or NFTs. Many of those executives left last year, including the chief growth officer, vice presidents of fulfillment and supply chain systems and the senior vice president of customer service. 

Also last year, GameStop began pulling back on its e-commerce efforts and returned its focus to getting stores to be more efficient.

CNBC reported that shares of GameStop dropped more than 20% in extended trading after the video game retailer announced the termination of Matthew Furlong. It released the news on the same day it reported its revenue dropped and its loss narrowed in its fiscal quarter compared to the year-ago period.

The company didn’t provide a reason for the firing, but noted the change in its quarterly securities filing. 

“We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders,” the filing states.

Cohen took a stake in GameStop in 2020, and in January 2021 he and two other former Chewy executives were named to the retailer’s board as part of an agreement with the company’s management. His investment firm, RC Ventures, currently has an 11.9% stake in GameStop, according to filings. 

Kotaku reported the Chewy founder who sold his home delivery pet food business for billions is a hero among meme stock investors on subreddits like WallStreetBets and SuperStonk. The most die-hard fans treat him more like a prophet than a rich guy who sold his one good idea, hanging onto his every social media post and business hoping to discover clues to the master plan that will make their GameStop stock even more ridiculously overpriced. 

At the same time, Kotaku reported, GameStop workers in the stores themselves continue to suffer. Cost cutting measures and ramped-up sales goals have increased the pressure on store managers and hourly employees, leading to high turnover and entire teams at some locations randomly deciding to quit on the spot.

Personally, I have worked in less-than-adequate retail stores, and I sympathize with the GameStop workers who have clearly had a horrible time at work. The company has swapped out Furlong for Cohen, but that won’t make much of a difference if GameStop continues to put increased pressure on its in-store workers.