GameStop shares tumble after CEO says store network will shrink

FILE PHOTO: Traders work at the post where GameStop is traded on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 12, 2024. REUTERS/Brendan McDermid/File Photo

By Suzanne McGee, Priyanka G

(Reuters) -Shares of GameStop tumbled on Monday after CEO Ryan Cohen told investors that the videogame retailer plans to operate a smaller network of stores and gave no details on what it plans to do with its cash pile.

GameStop shares were down 13.4% at $24.86 on Monday afternoon after the annual general shareholder meeting, which lasted about 20 minutes.

Cohen said he anticipates the business will be operated with “a smaller network and more value-added" items as part of the company's attempt to boost sales and profitability.

He did not say how the company will use its roughly $4 billion in cash, following a share sale that raised more than $2 billion earlier this month.

Shares of the video game retailer have gyrated wildly over the last month after Keith Gill, the stock influencer known as Roaring Kitty who helped kick off meme-stock mania in 2021, reappeared and later disclosed a large position in GameStop.

The initial meeting scheduled for last week was adjourned due to a technical glitch resulting from high demand from shareholders wanting access to the online feed, according to a spokesperson for Computershare, which hosted the online-only gathering.

The company has been grappling with slowing sales as its core business of selling new and pre-owned videogame disks takes a hit from consumers' move to downloading games digitally or streaming.

GameStop raised $933 million by selling shares to cash in on a meme stock rally last month, when the stock doubled in value and an additional $2.14 billion earlier this month. Still, shares are down sharply from their May peak and down more than 70% from 2021 intraday highs.

Gill triggered the most recent wave of exuberance among retail investors after he disclosed ownership of 5 million GameStop shares and 120,000 June $20 strike call options in a screen shot posted on Reddit on June 2.

Gill updated his position last week to show he owned about 9 million shares and no options on the company.

(Reporting by Suzanne McGee, additional reporting by Saqib Iqbal Ahmed; editing by Ira Iosebashvili, Megan Davies, Dave Gregorio and Matthew Lewis)