GameStop shares dropped significantly on Monday after a highly anticipated annual meeting concluded without providing specific updates on the video game retailer’s future plans.
The company’s stock fell by 12.1% by the end of the day, with a peak decline of 17% to $23.79. The shareholder event, which had been rescheduled due to technical issues, lasted only about 30 minutes and did not include a Q&A session for shareholders.
During his brief remarks, CEO Ryan Cohen emphasized the company’s focus on reducing costs and increasing profits, suggesting that more store closures might be imminent.
Cohen highlighted that revenues without profits and future cash flow prospects do not benefit shareholders, indicating a shift towards a smaller network of stores with higher-value items that align with the company’s trade-in model. However, he refrained from elaborating on specific growth strategies.
Cohen also discussed the importance of maintaining a strong balance sheet, considering it a strategic advantage during economic uncertainty. As of early May, GameStop had around $1 billion in cash and cash equivalents.
He commented on the economic challenges posed by recent monetary and fiscal policies, noting that current interest rates require investments to yield higher returns. Cohen stressed that the company’s focus is on long-term shareholder value rather than making lofty promises.
The annual meeting had previously been postponed due to computer issues caused by high interest in the livestream. GameStop had gained renewed attention from investors, partly due to the influence of Keith Gill, also known as Roaring Kitty, who was instrumental in the 2021 trading frenzy around the stock.
Gill’s current position in GameStop exceeds 9 million shares after he exited a significant call option position before its expiration.
Despite ongoing challenges with the shift to online gaming and away from physical video game sales, GameStop has seen its stock rise significantly in recent weeks, more than doubling in May and increasing by about 44% year to date.
The company recently raised over $2 billion through an at-the-market equity sale, aiming to use the funds for general corporate purposes, which could include acquisitions and investments, as it attempts to navigate its transformation under Cohen’s leadership.
