GameStop sank nearly 20% on Thursday and was set for its worst session in two years after the surprise exit of a CEO handpicked to lead its online expansion fanned concerns about the videogame retailer’s ailing business. The company fired Matt Furlong, who joined in 2021 to shift its focus from brick-and-mortar to e-commerce as the industry moved away from physical disks. The company did not name a CEO to succeed him and said it would not hold an earnings call.
Investors had hoped the move would spur a turnaround at the company, which needed help to adapt to customers shifting from brick-and-mortar to digital gaming. But it was the fifth CEO to leave the company in less than five years and the latest sign of trouble at a firm that has lost ground in recent quarters.
The company reported a first-quarter loss on Wednesday as videogames and other merchandise sales declined. Its online sales were strong during the period, but more was needed to offset the drop in other categories. Its overall revenue dropped by more than 30%, and its stock price dipped on the news of Furlong’s departure.
Shares of the company, which also owns a chain of retail stores and publishes gaming magazine Game Informer, fell about 16% in premarket trading. The stock was trading at its lowest level since April 2022, when it dropped about 60% following a similar loss announcement by another e-commerce-focused company, RC Products Inc (RC.N).
Several of the company’s top lieutenants have also left recently. In February, the Wall Street Journal reported that the finance chief had been forced out, and merchandising chief Frank Hamlin is set to resign soon. The stock has been under pressure as investors compare the company’s results with its inflated stock price, which was driven up by a Reddit-fueled trading frenzy and a “short squeeze” when rising prices forced short sellers to buy back shares they had sold short to limit their losses.
The company’s e-commerce strategy is the centerpiece of its turnaround plan. It is focusing on its mobile app and other online efforts as it struggles to compete with a growing list of rivals that offer free shipping or other incentives to lure consumers to their websites. The company is also expanding its product selection to help it diversify beyond video games, which make up about a third of its total revenue.