GameStop (NYSE: GME), the once viral meme stock, has witnessed a surprising and gradual surge in its stock price throughout this year. Despite the initial volatility and speculative frenzy surrounding the company, a remarkable turnaround has unfolded.
However, the stock may be poised for another volatile run and a potential sell-off after the company’s abrupt decision to fire its CEO Matthew Furlong on June 7.
As a result, GameStop’s shares plummeted significantly in the premarket on Thursday, June 8, as investors jumped ship in Wednesday after-hours trading following the announcement. Furlong’s departure comes months after the retailer posted its first quarterly profit in two years while he was in charge.
The decision coincided with GameStop’s latest quarterly report, which, among other things, showed another revenue decline for the Grapevine, Texas-based retail company.
GameStop stock price analysis
At the time of writing, GME stock price stood at $21.45, down 18.8% in premarket trading. The drop came after shares closed up 5.85% at $26.11 in regular trading hours on June 7.
Over the past month, the stock surged more than 27.6%, while its year-to-date gains stand at over 40%.
Following the after-hours sell-off, the stock is now testing the ascending trend line that connects March and May 2023 lows. The same level, around $21.50, also hosts the 200-week moving average (MA). A break of this zone would pave the way for a deeper pullback towards $18.00, where a major trend line is located. On the upside, the $26-27 zone will continue to offer resistance in case the bulls are able to facilitate a reversal.
What else is driving GME down?
The news of GameStop’s management reshuffling came on the same day the company published its Q1 financial results, showing a year-over-year revenue drop and a narrower quarterly loss.
Notably, in the quarter that ended on April 29, GameStop generated $1.24 billion in revenue, down from $1.38 billion in the same period last year. The company’s net loss stood at $50.5 million, or 17 cents per share, compared to $157.9 million, or 52 cents per share, in the year-ago quarter.
GameStop’s sales in the US, Australia, and Canada also notably plunged compared to the year-ago quarter, with Europe being the only major market that witnessed a sales increase.
GameStop appoints a new executive chairman
In addition, GameStop appointed its board chairman Ryan Cohen as executive chairman, who will be taking on his new role immediately.
“We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders.”– GameStop wrote in the filing.
Cohen, a prominent activist investor, acquired a stake in GME in 2020, and just a year later, he and two other former Chewy executives obtained a seat on GameStop’s board. According to filings, Cohen’s venture capital (VC) firm, RC Ventures, currently holds an 11.9% stake in the company.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.