GameStop (GME) stock fell in premarket trading on Thursday after the company announced the layoff of CEO Matthew Furlong and reported quarterly revenue that fell short of expectations.
GameStop announced Furlong’s departure as part of its quarterly earnings release Wednesday night. The company’s largest investor, Ryan Cohen, has been named executive chairman.
The video game retailer did not hold a quarterly earnings call, normally an industry standard, to discuss its recent quarter or the change in management. GameStop’s first quarter was worse than Wall Street had hoped, with revenue of $1.24 billion falling short of analysts’ expectations of $1.34 billion.
GameStop shares fell nearly 20% at market open Thursday.
The release of Furlong marks a shift in GameStop’s turnaround efforts. Furlong, a former Amazon executive, was seen as someone who could take GameStop further into the digital market.
Cohen founded Chewy (CHWY) before becoming a popular activist investor amid the meme stock craze. He joined GameStop’s board of directors in January 2021 as Reddit users flocked to the stock and sent shares soaring higher than in the month.
Wednesday’s announcement says Cohen’s responsibilities will include “capital allocation and management oversight.”
Cohen tweeted“Not for long” less than half an hour after the announcement.
Some Wall Street analysts weren’t impressed with GameStop’s moves on Wednesday. Wedbush chief executive Michael Pachter maintained his sell rating on GameStop shares and lowered his price target to $6.20 from $6.50.
“We remain convinced that GameStop is doomed, with declining sales of physical software and a shift in sales to subscription services and digital downloads sealing its fate,” Pachter wrote in a note to customers Thursday. . “While we believe the chain could have some value if managed with the aim of reaping profits, we don’t see a turnaround on the horizon without competent management.”
Pachter also doesn’t see an easy path for GameStop to find a new general manager.
“We believe the lack of clear direction and the ruthless dismissal of Mr. Furlong virtually guarantees that Mr. Cohen will have difficulty attracting a qualified replacement,” Pachter wrote.
Josh is a reporter for Yahoo Finance.
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