A day after videogame retailer GameStop Corp. fired Chief Executive Matthew Furlong, installed activist investor Ryan Cohen as executive chair and reported falling quarterly sales, one analyst said he remained convinced that chain was “doomed,” while others were left trying to chart the company’s path under new leadership.
“We remain convinced that GameStop is doomed, with declining physical software sales and a shift of sales to subscription services and digital downloads sealing its fate,” Wedbush analyst Michael Pachter said in a research note on Thursday. “While we think that the chain might have some value if run in order to harvest profits, we don’t see a turnaround on the horizon without capable management.”
GameStop announced Furlong’s firing, and Cohen’s elevation to executive chairman, in a brief statement on Wednesday. “In conjunction, the Company’s former CEO has been terminated,” that statement said, without offering a reason. In a tweet, Cohen — the Chewy Inc. CHWY co-founder who over recent years amassed a large stake in GameStop and eventual control of the company — said: “Not for long.”
Shares of GameStop sank 18.2% on Thursday. The drop put the stock on pace for its largest percentage decrease since June 10, 2021, when it fell 27.16%. Thursday’s decrease also wiped away a big chunk of the gains the stock had been making since May. Still, the analysts said that software sales fell 30%, marking the biggest drop in 10 quarters, potentially due to underperforming smaller games, while broader retailer caution over weaker toy demand likely pulled sales in GameStop’s collectibles business lower. However, the software segment in the second quarter would likely get a lift from “The Legend of Zelda: Tears of the Kingdom.”