Ryan Cohen, a billionaire investor whose bet on GameStop Corp made him popular among meme stock traders, took over as executive chairman on Wednesday after the company's CEO was ousted and reported a wider-than-expected quarterly loss.
Investors pushed the stock price down more than 20 percent in after-hours trading, continuing a roller-coaster ride that started in early 2021 when retail investors piled in to prove hedge fund betting on GameStop's demise wrong.
Some analysts are asking if Cohen can actually turn GameStop around.
Matt Furlong's firing on Wednesday was almost exactly two years after GameStop brought the former Amazon.com executive back to the United States from Australia where he was working.
GameStop did not say why Furlong was terminated, but did not respond to a Reuters request for comment. He and his representative also did not respond to requests for comment.
In early 2021, Cohen, who made his fortune selling the online pet products company Chewy for $3.5 billion in 2017, joined GameStop's board and has been putting his imprint on strategy ever since. With the plans to transform the company into an e-commerce powerhouse, Cohen transformed its top ranks by bringing in a string of executives from Amazon. Many of the hires, who were frequently drawn from Cohen's personal network and vetted by him, have not lasted long.
Cohen has also backtracked on plans to build out e-commerce, relying more on GameStop's brick-and-mortar stores and using them as places where customers can pick up online orders.
GameStop said net sales for the three months through April fell 10 per cent to $1.24 billion, marking a fourth consecutive decline in quarterly revenue.
Since Furlong's appointment, GameStop shares have lost more than half their value and are down about 65 per cent since June 2021. Cohen is the company's biggest investor.
According to sources close to him, Cohen is a hands-on executive and very demanding boss, sometimes worrying that executives lacked the kind of intensity he displays.
In October 2021, former chief operating officer Jenna Owens left the company, and former financial head Michael Recupero, who was hired at the same time as Furlong was brought in, was fired last year.
It reflects the utter lack of strategy. They wanted to be like Amazon and were hired from Amazon in 2021, said Michael Pachter, an analyst at Wedbush Securities.
GamingStop said it will not hold a conference call to discuss the quarter.
Since making his first investment at GameStop, Cohen has been fashioned into an activist investor, a reputation he developed with bets last year on Bed Bath Beyond and more recently on Alibaba and Nordstrom.
He pushed for changes with mixed success at each company. Bed Bath Beyond, where he quickly settled with the company for board seats last year, filed for bankruptcy earlier this year. At Nordstrom news of Cohen's stock, the company's stock price surged, but he then quietly withdrew his nomination for two directors after pushing the company to replace the Nordstrom director who had previously been the CEO of Bed Bath Beyond. In the past 52 weeks, Nordstrom's stock price has fallen 29 per cent.
While Cohen arrived at GameStop to build Chewy into a powerhouse, industry analysts and some investors have questioning his ability to revive other retail firms.
Wedbush's Pachter said Cohen is incapable of running a retail operation. Is it like Elon Musk, who has Twitter, running the startup. In August, Cohen sold his stake in bed bath, just months after reaching the settlement in March, causing its stock price to skyrocket.
While the'meme traders' love Ryan Cohen, this is not plan A. This GameStop is a business in decline and a Hail Mary pass for investors to count on Cohen to turn it around, said Thomas Hayes, chairman of Great Hill Capital LLC.