September 30, 2023


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GameStop turns on Ryan Cohen.  But restoring Meme Stock seems unlikely.

GameStop turns on Ryan Cohen. But restoring Meme Stock seems unlikely.

GameStop has turned to activist investor Ryan Cohen as it looks to stop losing confidence in its turnaround strategy. However, the video game retailer’s chances of returning to the heights it once reached as a meme stock favorite seemed remote.

GameStop (stock ticker: GME) stock is down 19% in early trading Thursday, to $21.05. Cohen’s appointment as CEO failed to assuage concerns about GameStop’s continuing losses and declining revenue.

Perhaps most damaging was the company’s planned earnings call Wednesday’s cancellation, leaving investors in the dark about GameStop’s future plans. Former Amazon (AMZN) CEO Matt Furlong has been implementing a cost-cutting strategy that failed to impress the few Wall Street analysts still covering the stock. GameStop said on Wednesday that Furlong was fired by its board of directors earlier this week.

“We remain convinced that GameStop is doomed to decline
“Physical software sales and the shift in sales to subscription services and digital downloads are determining its fate,” Wedbush analysts led by Michael Pachter wrote in a research note Thursday.

Wedbush cut its price target for GameStop to $6.20 from $6.50, while maintaining an underperform rating on the stock.

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GameStop did not immediately respond to a request for comment.

Cohen’s appointment may represent an attempt to recapture the excitement around GameStop stock when it was favored by retail traders hoping to profit from hurting short sellers making bearish bets against the company. However, after Cohen sold his stake in retailer Bed Bath & Beyond (BBBYQ) last year, he became a less popular figure among the traders who helped drive the stock meme craze and who have congregated on social media sites like Reddit’s WallStreetBets forum.

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GameStop itself is now less popular with retailers. According to the “Meme Stock Factor” devised by Counterpoint Funds, which measures the interest being paid to a stock relative to its volume, excitement around GameStop has recently fallen to levels lower than any level since the meme stock spike of 2021. Attention instead on stocks related to artificial intelligence technology.

Other Mimi shares such as movie theater chain AMC Entertainment Holdings

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(AMC) also faded as a focus of attention. AMC stock fell 4% in early trading Thursday.

Write to Adam Clark at [email protected]