GameStop Names New CEO, Reddit Goes Wild

The main stock-focused subreddits are losing it after Wednesday’s GameStop earnings report. Given that GameStop was the central focus of a January short squeeze that kicked off popular interest in “meme stocks,” it’s only natural that Reddit would stay focused on the retailer.

The biggest news: GameStop has a new CEO. Matt Furlong previously worked as an executive for Amazon. Mike Recupero, another former Amazon exec, has been promoted to the role of chief financial officer. Redditors promoting GameStop’s position due to this news, saying it bodes well for the future of the stock, are a common sight on the Superstonk subreddit this morning

Earnings Report Beats the Odds… Sort of

The earnings report was good news, but it requires a bit of qualification. GameStop’s sales for the last quarter were up from where they had been. In fact, they showed a 25% increase in sales over last quarter, which is impressive on its own. It is worth noting, however, that the company is still operating at a loss with these sales numbers. It is at least a smaller loss than prior quarters, though, showing signs that their business is turning back around.

Encouragingly for GameStop bulls, the company beat out the estimates in two metrics. First, they took in some $1.28 billion in revenue, putting them above the estimate of $1.17 billion. Second, the company’s stock value dropped by $0.45 instead of the expected loss of $0.71, which indicates an encouraging quarter for the heavily traded stock.


However, the company’s stock still dropped twelve percent after the report, due mostly to the company’s unwillingness to comment on a forecast for their performance later in the year. It is strange that they would decline to drum up excitement for their coming plans–but perhaps GameStop’s new CEO is playing it safe for now.

Another issue that affected the stock drop was the company’s announcement that they could sell up to 5 million shares of their stock via a filing they made with the SEC. They haven’t stated when they would plan to do this, but it’s an option in case they need a cash injection. Users on Reddit have noted that they are unlikely to tap this mechanism unless their next quarter is particularly brutal. The company seems to have plenty of cash on hand as a result of its earlier market offering.

SEC Investigation

The wild swings in GameStop’s stock value due to amateur trading interest has caught the SEC’s eye. The group has asked GameStop to hand over documents relating to their finances for review. GameStop has announced that they plan to comply fully with the investigation.

Back in February, several prominent members of the subreddit community r/WallStreetBets testified before Congress about their roles in the January short squeeze. One notable poster, Keith Gill, was the subject of a class-action lawsuit for allegedly misrepresenting himself as an amateur trader when he is actually a financial advisor. Gill, for his own part, has denied any wrongdoing, bluntly stating that he simply “likes the stock.”

New Faces in Executive Roles

The company also welcomed a slate of newcomers to executive roles during the earnings report. Ryan Cohen has taken over as chairman of the board of directors for GameStop. Cohen’s previous job as Chewy CEO gives him vital experience running a digital sales platform. Cohen’s vision is to see GameStop dominate in the world of online video game sales–something that has been a major struggle as gamers abandoned brick-and-mortar retailers for online platforms.

Playing Switch

In addition to Furlong and Recupero, GameStop has added a few other former Amazon leaders to their ranks. Elliot Wilke will serve as the company’s new chief growth officer, while Jenna Owens takes over duties as the company’s COO. Notably, GameStop also has its first chief technology officer in Matt Francis.

The poaching of former Amazon talent signals to investors that GameStop is seriously dedicated to online sales as the vector for their continued growth. However, some analysts are unconvinced that “go digital” is the all-curing salve that Reddit has made it out to be.

On the CNBC show Closing Bell, analyst Anthony Chukumba shared his thoughts on the matter. “It’s great that these guys worked at Amazon. Amazon is a very successful retailer that I do cover, that I’m very familiar with, but at the end of the day, GameStop’s problems have very little, if anything, to do with e-commerce,” he said.

GameStop’s Biggest Problem

The problems that GameStop faces are related to the current distribution of video games, according to experts. Video game players simply don’t buy physical retail releases much anymore–online or otherwise. The majority of players download their games directly from the storefronts of their platform of choice.

Whether GameStop can orient itself as the one-stop shop for games again in an era of decentralized distribution is still the biggest question for investors. Yes, excitement from social media is good. And, yes, the presence of top Amazon executives in leadership roles is encouraging. However, that’s all secondary to the main concern: becoming a profitable company. Only time will tell if that’s something this meme stock can pull off in 2021.

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