GameStop Stock Plummets as CEO Ryan Cohen Speaks of Plan to Cut Costs

GameStop CEO Ryan Cohen said the videogame retailer plans to cut costs and scale back its network of physical stores, but it wasn’t enough to stem a slide in the stock.

In a highly anticipated speech at the company’s annual meeting, Cohen said the firm will continue cutting costs and focusing on profitability.

“Revenues without profits and prospects of future cash flows are of no value to shareholders,” said Cohen. “This means a smaller network of stores with an expanded assortment of higher value items that fit into our trade-in model.”

GameStop stock was down 12% to $25.17 shortly after the meeting concluded. It closed down 1.4% at $28.70 on Friday.

Cohen touted the firm’s balance sheet, which has been bolstered by a series of stock sales since shares took off during the January 2021 surge in meme stocks. Most recently, the company sold 45 million shares in May and 75 million shares in June, grossing $3 billion.

“Having a strong balance sheet, especially in times of economic uncertainty, is a strategic advantage,” Cohen said. “While the future is always uncertain, the last decade’s monetary and fiscal policies, both within the US and globally, are historic anomalies. Exiting from an ultra low interest rate environment is likely to have unforeseen reverberating effects across the economy, as seen with inflation hitting 40 year highs in 2022.”

Cohen’s remarks were brief. Since he took over the reins at GameStop, the Chewy co-founder has gained a reputation for not giving analysts or investors much information. The company hasn’t provided a full-year financial outlook in years.

“As my father always said, actions speak louder than words,” said Cohen, who also serves as chairman. “We’re focused on building shareholder value over the long term. We’re not here to make promises or hype things up. We’re here to work. Thank you for being a shareholder.”

GameStop’s picks for the board were elected. Shareholders also approved a proposal related to compensation. A stockholder approval relating to diversity disclosures was rejected.

The annual meeting had been scheduled for Thursday. It was postponed because too many people signed on to a third-party livestream of the event, crashing the system.

The stock still managed to end last week in positive territory, with a gain of 16%. It remains up 43% since the beginning of the year.

GameStop has been the center of renewed interest in meme stocks, companies whose share prices move more in reaction to social media posts than the fundamental health of the businesses. The cinema chain AMC Entertainment, another meme stock, was down 4.1% early on Monday afternoon.

In May, Keith Gill, an investor who become a Reddit folk hero for his bullish bets on GameStop prior to the January 2021 meme frenzy, helped reignite interest in those companies with posts under the Roaring Kitty account he used in the initial trading furor. As of June 13, he owned more than 9 million shares, up from 5 million shares earlier in the month, according to his posts on Reddit. He previously owned call options that would have allowed him to buy shares at $20.

Write to Rupert Steiner at [email protected]