Traders work where GameStop is traded on the floor of the New York Stock Exchange (NYSE) in New York City, United States, June 12, 2024.
Brendan McDermid | Reuters
GameStop Shares fell on Monday after no concrete updates on the video game retailer’s future plans were offered at the company’s highly anticipated annual meeting.
Meme stock ended the session down 12.1% as the company’s postponed shareholder event ended without detailed comments on its strategies. No shareholders were able to ask questions during the approximately 30-minute meeting. Shares fell as much as 17% to $23.79.
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In brief opening remarks, CEO Ryan Cohen reiterated the company’s plans to focus on cutting costs and increasing profits and hinted that more store closures could be on the way.
“Sales without profits and prospects for future cash flows are worthless to shareholders. This means a smaller store network with an expanded range of higher value items that fit into our trade-in model,” he said.
Cohen did not provide further details about the company’s future growth strategies. He spoke of the importance of a “strong balance sheet” and called it a “strategic advantage” – especially in times of economic uncertainty. As of May 4, GameStop had about $1 billion in cash and cash equivalents on its balance sheet.
“While the future is always uncertain, the monetary and fiscal policies of the last decade, both in the United States and globally, are historical anomalies. Exiting an ultra-low interest rate environment will likely have unforeseen impacts across the economy, as evidenced by rising inflation reaching 40-year highs in 2022,” Cohen said.
“At current interest rates, an investment made in today’s economic climate must have a higher threshold of return,” he added. “As my father always said, actions speak louder than words. Our focus is on increasing shareholder value in the long term. We are not here to make promises or exaggerate things, we are here to work.”
The event was interrupted due to computer problems and postponed on Thursday when servers crashed due to overwhelming interest in the stream.
GameStop found itself in the spotlight again as Reddit ringleader Roaring Kitty, whose legal name is Keith Gill, unleashed another trading frenzy. In online trading, Gill gained notoriety in 2021 for touting his large positions in GameStop, both in common stocks and in risky options. Since his return to the scene, his position has surpassed 9 million GameStop shares after he exited a gigantic call option position before expiration.
The stock has gained seven times in the past eight weeks after more than doubling in May. Year to date, it is up about 44%.
GameStop is still struggling to transition to online gaming and away from brick-and-mortar video game purchases, and investors are betting that Cohen will ultimately reinvent the company.
The retailer recently raised more than $2 billion through a stock sale in the market as the video game company benefited from the revived meme rally. GameStop said it intends to use the money for general corporate purposes, which could include acquisitions and investments.
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2024-06-17 20:37:41
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