June 8 (Reuters) – GameStop ( GME.N ) fell about 19% on Thursday and was set for its worst session in two years, as the surprise exit of a CEO picked to lead its online expansion raised concerns about the video game retailer’s faltering business.
Former Amazon.com executive Matt Furlong was ousted and top shareholder Ryan Cohen was named chief executive of a company that has become a favorite of memo-stock traders with promises of a digital hub.
Still, GameStop is set to wipe out half of its profits and about $1.3 billion in market value by 2023, with management change in recent years the only constant, one analyst said.
“With an earnings call, little investor communication and a lack of consistent strategic vision, it’s difficult to have an opinion,” said Jefferies’ Andrew Urwitz.
“There is stability, changes at the top. In the last 5 years, GameStop has had 5 CEOs and 3 CFOs.”
Uerkwitz was one of the last few analysts to cover GameStop after a major pandemic-era rally fueled by traders rallying on Reddit, prompting several brokerages to say the stock price has disconnected from its fundamentals.
Shares of the company have fallen nearly 80% since reaching a peak of $120.75 during the meme-stock history of 2021. Best Buys (BBY.N) has a trailing 12-month price-to-sales ratio of 1.38, compared to 0.37. , according to Refinitiv.
GameStop has struggled to deliver on Cohen’s pledge to become the Amazon of video game stores, and recent months have seen several high-profile exits, including those from the Chevy co-founder’s private network.
The video game retailer, which still relies mostly on brick-and-mortar stores, on Wednesday reported a fourth consecutive drop in quarterly revenue and a bigger-than-expected loss.
“GameStop is doomed,” said Michael Backer of Wedbush Securities. “The lack of clear direction and Furlong’s harsh stoppage ensure Cohen will have difficulty attracting a worthy replacement.”
Reporting by Akash Sriram and Jaspreet Singh in Bangalore; Editing by Devika Syamnath and Shaunak Dasgupta
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Akash reports on technology companies, electric vehicle companies and the aerospace industry in the US. His reporting usually appears in the autos and transportation and technology sections. He holds a Masters in Conflict, Development and Security from the University of Leeds. Akash’s interests include music, football (soccer) and Formula 1.