GameStop appoints Amazon Australia chief as CEO, may sell shares
In a stronger-than-analyst quarterly report, GameStop said it could sell up to 5 million new shares, which would be worth $ 1.4 billion based on its last share price.
Matt Furlong, a nine-year Amazon veteran, will succeed George Sherman as CEO. GameStop said Mike Recupero, who spent more than 17 years at Amazon, will succeed Jim Bell as CFO.
Furlong will join on June 21, while Recupero, who was CFO of Amazon’s consumer business in North America, will join the team on July 12, the company said.
GameStop shares have nearly doubled over the past month, approaching their January high. It was at this point that a massive surge in investors on Reddit’s Wallstreetbets trading forum made the stock the most traded in the US market for several days.
The Securities and Exchange Commission has requested documents and information related to an investigation into the trade, GameStop revealed, as well as the trade in shares of other companies.
AMC Entertainment, Blackberry, Clover Health Investments and other recently rising so-called “meme” stocks fell more than 4% in extended trading on Wednesday.
Even after falling late on Wednesday, GameStop’s stock has gained more than 1,300% in 2021.
Previously, shareholders elected billionaire investor Ryan Cohen, the company’s largest shareholder and co-founder of online pet supplies retailer Chewy, as chairman.
He warned shareholders of more volatility to come. “Like my dad would say, buckle up,” Cohen said.
Taking advantage of the recent rise in GameStop’s share price, Wednesday’s announcement of a possible share sale follows the 3.5 million share issue in April, which raised around $ 550 million.
Some on the Wallstreetbets forum were disappointed with GameStop’s latest stock sale plan.
“Guys, why didn’t Cohen and his NEW CFO go to the damn bank and get a 2-3% loan to fund their new plans?” A commentator said on the site.
Furlong oversaw a small but growing part of Amazon’s business as Country Manager for Australia, a role his LinkedIn profile said he took on in May 2019. Under Furlong, the operating unit’s net sales Amazon’s e-commerce site in Australia roughly doubled in 2020 to A $ 1.12 billion ($ 867 million) from the previous year, according to a securities file.
“These appointments reflect the board’s renewed focus on building a technology company and investing in growth,” GameStop said in the statement.
While the recent rollout of new video game consoles is likely to benefit GameStop, analysts have warned that its stock price surge is disconnected from the company’s day-to-day operations. At least two Wall Street analysts recently dropped coverage of the company.
COOLING THE CORE OF ACTIVITY
Video games are a massive industry that rivals Hollywood in some ways, but GameStop’s core business of selling new and used video game discs is shrinking as consumers turn to game downloads. digitally or via streaming. The company has lost money over the past three years.
Cohen hopes to make GameStop an e-commerce company capable of supporting big box retailers. He told shareholders at Wednesday’s meeting in Grapevine, Texas that they had “ushered in a whole new era at GameStop,” but declined to provide a detailed plan.
He said the changes at GameStop should speak for themselves, including hiring new employees at Amazon, Google and Chewy.
“What retail investors were looking for was an overview of the strategy Ryan Cohen promised in January,” said Michael Pachter, analyst at Wedbush. “Every day he doesn’t reveal his strategy weakens the meme. I think that’s what scared the investors.”
GameStop said its net sales for the quarter ending May 1 jumped 25% to $ 1.28 billion, beating the average analyst estimate of $ 1.16 billion, according to Refinitiv data.
Its adjusted loss per share was 45 cents, beating expectations of a loss of 84 cents per share.
On a brief conference call, Sherman presented a summary of GameStop’s quarterly results and did not answer questions from analysts the way companies normally do.
Never miss a story! Stay connected and informed with Mint. Download our app now !!