GameStop Stock Price Plunges to Its 1-Year Low as Ryan Cohen Takes the Reigns as CEO

 Key takeaways

• GameStop (GME) appoints Ryan Cohen as new CEO after the company spent 4 months without a chief executive
• Cohen pledges to cut costs, stating that the current situation is “not sustainable”
• GME stock forms new yearly low after a 15.32% decline in the wake of the announcement

Ryan Cohen takes vacant GameStop CEO position in a bid to ensure longevity

GameStop (NYSE:GME) has announced that Ryan Cohen has become the new CEO of the company, replacing Matt Furlong who left the role in June.

Cohen became a director on the GameStop board in 2021, later rising to the position of chairman after he had played a key role in forcing out the company’s existing executive team and board of directors.

Cohen stated that “it is not sustainable for GameStop to operate a money losing business.” The new CEO has pledged to “avoid self-inflicted mistakes and stick to the basics” as “extreme frugality is required” to turn GameStop into a profitable business over time. Cohen has stated that the core goal is to ensure that GameStop remains in business for the long term.

The GameStop earnings report for Q2 2023 showed an uptick in sales with $1.16 billion revenue reported. Despite outperforming Wall Street’s expectations by 5.4%, GameStop still reported a loss per share of $0.03.

3-Year GME price chart, via CoinCodex

There was a quickfire selloff for GME stock following the announcement that Cohen would be appointed CEO. The 15.32% price reduction since 28th September may indicate that investors are less than convinced of Cohen’s ability to turn the company’s fortunes around.

GameStop has been struggling against the growth in digital game downloads, and Cohen’s early attempts at introducing new revenue streams, including a GameStop NFT collection, have fallen flat.

The traditionally brick-and-mortar company has attempted to better integrate itself with online business and eCommerce to offset the decline in demand for physical game discs, yet it has seen several of its online sales executives leave shortly after they were appointed.

GME forms new yearly low after falling 15.32% in the wake of Cohen’s appointment as CEO

GME stock has fallen 38.51% YoY, including a 15.32% fall in the past 5 days to take the stock to new 2023 lows. GME has now lost support at the $15.40 price level — the former yearly low — and it awaits to be seen whether there will be further downside to come.

GME has been in a consistent downtrend since it formed its yearly high in May, and is now 44% down from this level. This is now the third occasion that GME has fallen below $16.22 this year, with the stock forming higher lows on each prior visit until it fell below during trading hours today.

The CoinCodex price prediction algorithm signals that a bounce is likely from here. Both previous dips below $16.22 in 2023 were followed by a significant bounce from GME, posting 60% and 73% gains respectively. The algorithm expects GME to bounce 27% this time around, indicating that demand may be declining at key historical support.

1-Month price prediction for GME, via CoinCodex

Bottom line: Cohen pledges to cut costs in a bid to boost profit

Ryan Cohen has split opinion among GME shareholders since he was appointed as chairman of the board in June 2021. At the time, he had promised to transform the business into an eCommerce retailer so that it could stay afloat amid rising demand for digital game downloads and falling demand for physical discs.

In 2022, however, the company once again pivoted back to focusing on its brick-and-mortar stores, with several digital sales executives leaving the company in succession. Cohen has now shifted focus to cutting costs instead of boosting revenues, stating that the company’s unprofitability is simply not sustainable.

With another major selloff for GME in the wake of the announcement and a new yearly low being formed at the $15.39 price level, it seems as though GameStop’s struggles may continue. The CoinCodex algorithm expects a short-term bounce for the stock before it retraces back into the same demand zone.