GameStop received multiple bad news in its Q1 report: first, its revenue fell sharply YoY by over 10% to $1.24 billion, significantly below the market's expected $1.36 billion; second, the company fired current CEO Matthew Furlong and appointed board chairman and activist investor Ryan Cohen as executive chairman, effective immediately; and more strangely, the post-earnings conference call with investors was also cancelled. The company's stock price plummeted over 20% in early trading on Thursday.
A few years ago, GameStop, which was once highly praised by American retail investors, has undergone significant changes.
After the US stock market closed on Wednesday, June 7th, GameStop announced its first quarter 2023 financial results ending on April 29th of this year. The company received several bad news in the first quarter report: first, its revenue fell sharply by more than 10% YoY to $1.24 billion, far below the market's expected $1.36 billion; second, the company fired current CEO Matthew Furlong and appointed board chairman and activist investor Ryan Cohen as executive chairman, effective immediately; and more bizarrely, the investor conference call after the financial report was also cancelled. The company's stock price plummeted nearly 20% after the market closed.
On Thursday, June 8th, after the US stock market opened, the company's stock price continued to fall, opening low and falling, with a decline of more than 20% at one point.
GameStop did not provide a reason for firing Matthew Furlong, but stated in the filing:
We believe that under Mr. Cohen's leadership, combining these efforts to stabilize and optimize our core business and achieve sustained profitability, while also focusing on capital allocation, will further create long-term value for our shareholders.
Cohen is a Canadian activist investor who previously founded the e-commerce company Chewy. Cohen invested in GameStop in 2020. As part of an agreement reached with the company's management in January 2021, he and two other former Chewy executives were appointed to the company's board of directors. The filing shows that his investment firm, RC Ventures, currently holds 11.9% of GameStop's shares.
In another securities filing, GameStop disclosed that Furlong was fired on Monday of this week and that he will be allowed to receive "salary and benefits related to wrongful termination." Furlong also resigned from the company's board of directors on the same day, reducing the number of board members to only five.
The filing stated that Cohen will be responsible for capital allocation, evaluating potential investments and acquisitions, and overseeing GameStop's holdings.
About half an hour after the news of Furlong's dismissal was announced, Cohen tweeted:
It won't take too long.
However, Cohen is known for making vague comments on social media.
As part of the leadership restructuring, Alan Attal, a former Chewy executive and current member of GameStop's board of directors, was appointed as the board's chief independent director, according to the filing. GameStop's General Counsel, Mark Robinson, has been appointed as the company's CEO and President. According to the filing, his responsibilities will include "administrative affairs, corporate development, legal affairs, and support for GameStop's shareholding, including oversight of other executives outside of Cohen." Robinson will report directly to Cohen and will continue to serve as GameStop's General Counsel.
Furlong was appointed as GameStop's CEO in June 2021, when the company was in the early stages of its turnaround plan. The former Amazon executive was brought on board as GameStop was attempting to transform from a long-time brick-and-mortar retailer to a gaming e-commerce player capable of competing with rivals such as Walmart, Sony, and Microsoft.
Prior to his two-year tenure as GameStop CEO, Furlong spent nearly nine years at Amazon, where he was responsible for the company's growth in Australia before leaving. Prior to that, he served as a technical advisor to the head of Amazon's North American consumer business and worked at Procter & Gamble.
According to GameStop's financial report, revenue from the US, Canada, and Australia in the first quarter of this year decreased by 16.4%, 18.5%, and 8.9%, respectively, compared to the same period last year, while revenue from Europe increased by 26.2% YoY.