GameStop (GME) CEO Gets the Axe as Ryan Cohen Continues to Make His Mark, Analyst Says Co. Will Likely Look to Tech Sector for New Hires
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GameStop (NYSE: GME) continues to shake up its management team as Chairman-elect and major shareholder Ryan Cohen moves chess pieces in an effort to regain relevance in the video game sector and justify the stock's 800% year-to-date surge. CEO George Sherman was the latest casualty.
Sherman will be stepping down on July 31, 2021, or earlier if a replacement can be found. Ryan thanked Sherman for his "valuable leadership" and "decisive steps to stabilize the business during challenging times."
Today's CEO news follows news that CFO Jim Bell resigned as of March 26, 2021. In addition Chief Customer Officer, Frank Hamlin also departed in March, and Chief Merchandising Officer Chris Homeister announced plans to resign.
Cohen and the Board’s Strategic Planning and Capital Allocation Committee will be leading a search to identify CEO candidates "with the capabilities and experience to help accelerate the next phase of the Company’s transformation," the company announced.
Telsey Advisory Group analyst Joseph Feldman believes GameStop will turn to the tech industry to find the next CEO and CFO. The ideal candidate "would require a wide range of strategic and operational experience, given GameStop’s complex business model, including ~4,800 global stores, digital, used games, new software and hardware, and collectibles," Feldman commented.
The analyst said the company should benefit from: 1) the new gaming cycle, with current demand outpacing supply for new generation Microsoft and Sony consoles; 2) its agreement with RC Ventures and the board refresh; and 3) its healthy balance sheet. That said, he continues to rate shares at 'Underperform' with a $30 price target, saying the current valuation "far exceeds our rosy fundamental expectations and projected multiyear benefits from the strategic transformation."
Shares of GameStop are up 7.5% in mid-day action Monday following the CEO news.
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