GameStop (GME) announced Thursday it was planning to elect activist investor Ryan Cohen chairman of the board of directors at the next annual shareholder meeting on June 9. GameStop stock fell slightly after initially popping.
Cohen, a co-founder and former CEO of online pet products retailer Chewy.com (CHWY) and manager of RC Ventures, has pushed GameStop to transform its struggling brick-and-mortar business into an e-commerce enterprise.
The Grapevine, Texas based company also revealed other board nominations. Larry Cheng, the first investor in Chewy and managing partner of investment firm Volition Capital is also expected to join the board, as well as Yang Xu, a Kraft Heinz executive.
On March 31, GameStop’s chief customer officer Frank Hamlin stepped down, while CFO Jim Bell left the company on March 26.
GME stock rose to 185.86 in morning trade but faded to down 0.4% at 177.28 on the stock market today. Shares are down nearly 65% from its peak of 483 in late January, according to MarketSmith chart analysis.
GameStop stock rallied amid a Reddit-fueled short squeeze that forced hedge funds who had shorted the stock to take big losses.
GME stock is still well above its pre-squeeze levels.
The company’s relative strength line is trending lower, after bouncing wildly as the stock surged and dropped in the last few months. GameStop’s RS Rating is a top-notch 99, but its EPS Rating is a dismal 28, as the company missed fourth-quarter earnings estimates.
EPS rose 5.5% to $1.34, below views for $1.46, while sales fell 3.3% to $2.12 billion vs. views for a 2.2% increase to $2.24 billion. Same-store sales grew 6.5%, missing consensus estimates of 8.1%. But management said comps in early Q1 were surging, with February same-store sales up 23%. Global e-commerce sales soared 175% in Q4.
Earlier this week, GameStop increased the value of the new stock it may sell to $1 billion from $100 million. The company said in a statement that proceeds of the sale would be used “to further accelerate its transformation as well as for general corporate purposes and further strengthening its balance sheet.”
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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