GameStop on Wednesday named a former head of Amazon’s Australian business as its chief executive and said it could sell new shares, the latest in a bid to transform the struggling videogame retailer whose stock has surged this year.
In a quarterly report that was stronger than analysts forecast, GameStop said it may sell up to 5 million new shares, which would be worth $1.4 billion based on its share price in after-hours trading. The stock fell 9 per cent.
Matt Furlong, a nine-year Amazon veteran, will succeed George Sherman as chief executive officer. GameStop said Mike Recupero, who spent over 17 years at Amazon, will succeed Jim Bell as chief financial officer.
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Furlong will join on June 21, while Recupero, who was chief financial officer of Amazon’s North American consumer business, will come on board on July 12, the company said.
Supported by a cult following of individual investors, GameStop’s volatile shares have doubled in the past month, and they are now approaching their high in January. That was when a massive surge driven by investors on Reddit’s wallstreetbets trading forum made the stock the most traded on the U.S. market for several days.
GameStop said it received a request from the Securities and Exchange Commission for documents and information related to an investigation into that trading, along with trading in shares of other companies.
AMC Entertainment, Blackberry and other recently surging so-called “meme” stocks fell in extended trade on Wednesday.
GameStop said its net sales for the quarter ending May 1 jumped 25 per cent to $1.28 billion, exceeding analysts’ average estimate of $1.16 billion, according to Refinitiv data.
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Its adjusted loss per share was 45 cents, beating expectations of an 84 cent loss per share.
The appointment of the new CEO and CFO comes two months after Reuters reported that the company was looking to replace Sherman.
“These appointments reflect the refreshed Board’s focus on building a technology company and investing in growth,” GameStop said in the statement.
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The news also comes only a few hours after shareholders elected billionaire investor Ryan Cohen, the company’s biggest stockholder and co-founder of online pet supplies retailer Chewy , as its chairman. GameStop announced his nomination in April.
“As my dad would say, buckle up,” Cohen told shareholders earlier in the day.
While the recent rollout of new videogame consoles is likely to benefit GameStop, analysts warned that its soaring stock price has become disconnected from the company’s day-to-day business. At least two Wall Street analysts recently dropped coverage of the company.
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GameStop’s core business of selling new and pre-owned videogame discs is shrinking as consumers move to downloading games digitally or streaming. The company has lost money for the past three years.
Cohen hopes to transition GameStop into an e-commerce business that can take on big-box retailers. He told shareholders at Wednesday’s meeting in Grapevine, Texas that they had “ushered in a whole new era at GameStop,” but he declined to provide a detailed plan.
Wednesday’s announcement of a potential share sale follows the sale of 3.5 million sales in April, which raised $551 million.