GameStop slumps on quarterly loss, CEO Cohen takes investment helm

Updated at 8:28 AM EST

GameStop  (GME) - Get Free Report shares were marked firmly lower in early Thursday trading after the videogame retailer posted another disappointing set of quarterly earnings, this time under new CEO Ryan Cohen.

The group also declined to host a conference call with analysts, instead directing investors to its Securities and Exchange Commission filings.

GameStop said sales for the three months ended in October, the group's fiscal third quarter, fell 9.1% from a year earlier to $1.078 billion.

GameStop's net loss for the period was pegged at $3.1 million, narrowed from the $94.1 million loss over the year-earlier period. Its reported loss of 1 cent a share topped Wall Street forecasts of a 9-cent loss. GameStop has reported only two profitable quarters in the past three years.

'Uphill battle for GameStop': CFRA

“While the softness in Q3 sales was to be expected, our experts have said that the increasing market-share losses to mass merchants and e-commerce giants such as Amazon will continue to be an uphill battle for GameStop," said CFRA analyst John Oh.

“As well, as cost-savings and profitability continue to be of focus for GameStop, our experts indicate there still may be quite a ways to go," he added. 

"In one example, our experts have noted that despite all the store closures we’ve already seen, GameStop still likely has twice as many stores today than what is needed.” 

GameStop shares were marked 7.75% lower in premarket trading to indicate an opening bell price of $13.69 each, a move that would peg its one-year decline at around 38%.

GameStop, which was valued as high as $22 billion during the meme-stock frenzy in January 2021, is now pegged at around $4.5 billion.  

The group's SEC filings also noted that Cohen will now manage GameStop's overall "investment policy," which it says "permits the Company to invest in equity securities, among other investments."

"Depending on certain market conditions and various risk factors, Mr. Cohen, in his personal capacity or through affiliated investment vehicles, may at times invest in the same companies in which the Company invests," GameStop said in its regular SEC 10-Q filing. 

"Such investments align the interests of the Company with the interests of related parties because it places the personal resources of Mr. Cohen at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company," the filing added.

GameStop has weathered loss of execs 

Cohen returned to the CEO role in late September, following the ousting of former boss Matt Furlong, the fifth CEO to depart the Grapevine, Texas, retailer over the past five years.

GameStop has also weathered a notable exodus of top executive talent, with CFO Diana Saadeh-Jajeh resigning in August.

Cohen, meanwhile, a billionaire investor famous for a host of meme-stock investments, is reportedly facing a Securities and Exchange Commission probe into some of his trades.

The Wall Street Journal reported on Sept. 8 that Cohen, who is also the founder of pet-supplies company Chewy.com, was asked by the SEC to provide information about both his trades and communications with senior executives at Bed Bath & Beyond.

Bed Bath & Beyond ultimately filed for Chapter 11 bankruptcy protection in April this year. The company was bought out of bankruptcy by Overstock.com,  (OSTK) - Get Free Report which relaunched itself under Bed Bath's name.

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