GameStop (GME) Plunges 13% After Unexpected Announcement From CEO

Ryan Cohen, GameStop Corp. CEO has informed investors that his focus for the gaming company is to achieve profitability. This comment comes at a time when GameStop has rebooted its share price on speculative retail pumps.

GameStop to Adopt Smaller Network of Stores 

The gaming firm’s CEO reiterated some of the actual utility focuses for the firm.

In addition to his profitability plan, Cohen intends to avoid the “hype” that has pushed the shares to the extreme as part of the ongoing meme-stock frenzy. During GameStop’s annual shareholders meeting which held on Monday after some earlier technical glitches, the CEO mentioned to his audience that revenue without profits and prospects of future cash flow are not valuable to shareholders.

“This means a smaller network of stores with an expanded assortment of higher-value items that fit into our trade-in model,” the GameStop CEO stated.

This suggest that the videogame retailer’s plans is to operate a smaller network of stores nationwide. The CEO unveiled no details regarding its plans for the $4 billion in cash it currently boasts of. This cash at hand comes following a share sale that raised more than $2 billion earlier this month.

Markedly, this is part of Cohen’s years-long effort towards pivoting the company into a digital storefront for the latest game releases. For the longest tine, GameStop is considered by short sellers as a failing brick-and-mortar store. In the last few years, the company has had to shut down a few of its distribution centers in addition to a comprehensive layoff season.

In January, the video game retailer opted to close the operations of its Non-fungible token (NFT) marketplace, citing ongoing regulatory uncertainties in the crypto space. Hence, the marketplace, which facilitated gaming NFTs and various collectibles on Immutable X and Loopring stopped getting support from GameStop.

GME Price Dropped by 13.4%

Shortly after Cohen’s recent announcement about shunning hype, the company’s shares plunged significantly. By Monday afternoon, GameStop shares went down by 13.4% and traded at $24.86. At press time, it had moved to $25.61, showcasing its volatility.

This stock has been moving sideways for a while but this drop in price has remained constant in the last few weeks.

Notably, the periods when the shares saw an uptick in its price were quite remarkable, owing to the fact that the gains recorded were sizable. When Keith Gill, known online as “Roaring Kitty,” made his first social media appearance, stating that he holds $181.4 million in GameStop stock, GME price rose by 300%. 

It remains uncertain what the next few weeks and months holds for GameStop but Cohen is optimistic that his decision would improve the outlook of the video game retailer.

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