It looks like activist investor Ryan Cohen will have to relinquish his Executive Chairman post at GameStop (NYSE:GME), but that is only because he will be taking on multiple other roles. Last week, the videogame retailer’s Board unanimously voted to appoint Cohen as the President, CEO and Chairman.
Market watchers were hardly surprised by the move, which comes in the wake of the firing of CEO Matthew Furlong – himself a Cohen appointee – who was given his marching orders in June. Since when, Cohen has held the Executive Chairman title.
Considering the Board was hand picked by Cohen and consists mostly of colleagues from Chewy, Wedbush analyst Michael Pachter thinks it suggests the appointment was “more of a coronation by his believers.”
“We are unaware of any recruiting activity, and can only surmise that the company could not convince any competent replacements to jump onto the sinking ship,” the analyst said dismissively. “The lack of clear direction and the callous termination of Mr. Furlong all but ensures that Mr. Cohen will have difficulty in surrounding himself with competent colleagues going forward.”
Moreover, says Pachter, all of Cohen’s initiatives have turned out to be duds. First, he wanted the company to “be like Amazon,” and in early 2021 brought on board three senior Amazon execs. All have since left with the struggling retailer having made “no progress whatsoever in growing sales.”
Then came an ill-fated NFT Marketplace, a badly timed effort that offered “no meaningful differentiation from far better capitalized competitors.” The problem is exacerbated by the fact it doesn’t look like there are other initiatives forthcoming.
If the chain was run so to “harvest profits,” Pachter thinks it could have “some significant value.” However, without competent leadership, he’s skeptical about the possibility of achieving such a turnaround. “With no experienced retail executives to advise him, we suspect that GameStop will continue its path to oblivion,” said the analyst.
As such, Pachter remains convinced that “GameStop is doomed,” and he maintains an Underperform (i.e., Sell) rating, backed by a $6 price target. That figure suggests the shares will post a decline of ~60% over the course of the year. (To watch Pachter’s track record, click here)
There’s currently a distinct lack of interest on Wall Street in this retail favorite, as no other analysts have chimed in with GME reviews over the past 3 months. (See GameStop stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
