Topline
GameStop shares cratered Thursday after the company disclosed yet another quarter of staggering losses and announced the termination of its CEO—adding to the retail stock’s ongoing stock slide, as its meme glory days fade further into the rearview mirror.
Key Facts
Gamestop stock crashed as much as 23% to $20.10 in early trading after the company reported a $50.5 million loss for the first three months of 2023, as well as a 10% year-over-year dip in sales.
That marks the largest daily loss for GameStop since June 2021.
Accompanying the Wednesday afternoon earnings release was an announcement that the retailer fired its CEO Matt Furlong, who stepped into the role two years ago; GameStop will now have its fifth CEO in as many years.
The firm did not name a new CEO and did not host an earnings call, an oddity for a public company.
In a brief statement, GameStop tapped Ryan Cohen, the billionaire investor who captained the stock’s surge two years ago, as its executive chairman.
Crucial Quote
“We remain convinced that GameStop is doomed,” Wedbush analysts Michael Pachter and Nick McKay wrote in a Thursday note to clients, lowering its price target for GameStop to $6.20, projecting the stock to slide another 70%. “The lack of clear direction and the callous termination of Mr. Furlong all but ensures that Mr. Cohen will have difficulty attracting a qualified replacement,” the analysts explained.
Key Background
In a January 2021 fever dream, GameStop shares popped as much as 1,640% from $5 to $87, thanks largely to “ape” retail investors congregating on the WallStreetBets Reddit board, who picked the video game retailer for nostalgia purposes as a middle finger to fundamental-focused institutional investors who held short positions. The staggering stock gains faded, though GameStop did ride its newfound glory to a clean-up of its books, cutting its long-term debt from more than $400 million in early 2020 to $26 million in the most recent quarter. Even still, GameStop continues to bleed cash, losing $309 million last year. Consensus analyst estimates collected by FactSet project the company to lose nearly $100 million this year.
Surprising Fact
GameStop stock is now down 37% over the last 12 months and 73% from its brief 2021 high, though it remains roughly 20 times higher than its level before the meme rush.
Tangent
Thursday was a far happier occasion for another stock that surged during the pandemic, Carvana. Shares of the used car company spiked about 20% in morning trading to a 2023 high after it shared better-than-expected earnings projections for the current quarter. Carvana stock is still down roughly 95% from its 2021 peak and about 75% from February 2020.
Further Viewing
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