On June 7th GameStop Corp. (NYSE: GME) fired its CEO Matt Furlong and appointed Ryan Cohen as the new executive chairman. These consecutive decisions were made after GME’s Q1 earnings report revealed a YoY decline in sales which caused the stock to plummet by 18.4%. The board’s decision to appoint Cohen on the other hand was likely due to three important reasons. The first is to avoid a power vacuum, the second is due to his popularity after the GME stock short squeeze, and the final reason is related to his outstanding business acumen. Given the board’s decision regarding Cohen, GME stock might be poised not only for a rebound but for a major run.
GME Stock News
Avoiding A Power Vacuum
Cohen’s new appointment as executive chairman comes with control over capital allocations, the authority to evaluate potential investments, as well as acquisitions, and an ability to oversee the managers of GME’s holdings. These executive powers solidify authority, and as a result, prevents a power vacuum from occurring in GME which would provide GME with stability until a new CEO is appointed.
Meme Stock King
The GME short squeeze was a momentous occasion as its + 2000% run represented a frustration with wall street corruption. In the midst of it all, Cohen who was a GME board member and a notable investor at the time, supported the short squeeze and became synonymous with the movement. His popularity skyrocketed on social media resulting in him becoming a figurehead in the meme stock community. His position within this community gives him an edge over other chairmen due to his trustworthiness and popularity among investors.
E-Commerce Expert
Throughout his career at GME, Cohen has constantly expressed that GME lacked a strategic vision due to its reliance on walk-in stores as opposed to online purchases. With that in mind, GME is now poised to take advantage of Cohen’s experience in the e-commerce sector thanks to his experience from his time as the CEO of Chewy, Inc. (NYSE: CHWY) where he elevated CHWY’s notoriety so much so that Petsmart purchased it for $3.3 billion.
That said, Cohen is likely to utilize his expertise in e-commerce in order to shift GME’s trajectory from a traditional retailer to an online tech-oriented retailer. A shift towards online purchases would likely result in a decrease in physical stores, which would cut expenses and increase profit margins due to a stronger focus on online purchases. In light of this, GME could return to profitability soon, which would reflect on the GME stock price.
Short data
As things stand, GME stock is witnessing an increasing short selling activity with its short interest increasing to 20.5% and 28% of its float on loan. At the same time, GME’s utilization rate is at 100% indicating that there are no more shares available to be shorted. Given Cohen’s popularity as a meme stock figurehead, GME stock could witness a short squeeze given the excitement surrounding Cohen’s appointment as executive chairman.
GME Stock Financials
According to its Q1 report, GME’s assets have decreased from $3.1 billion to $3 billion QoQ. Its cash balance also decreased during that time from $1.1 billion to $1 billion. Meanwhile, its liabilities remained stagnant at $1.79 billion.
As for revenues, GME’s net sales decreased YoY from $1.3 billion to $1.2 billion while its expenses decreased from $453 million to $345 million. As a result, GME’s net loss improved YoY from $157 million to $50 million.
Media Sentiment
@MTradess is bearish on GME’s business model. Can Cohen’s appointment change that narrative?
@AMCcheerleader is bullish on Cohen’s appointment as executive chairman
Technical Analysis
GME stock is in a bullish trend with the stock trading in an upward channel which the stock broke following its disappointing Q1 earnings. Looking at the indicators, GME is trading below the 200, 50, and 21 MAs which are bearish indications. Meanwhile, the RSI is neutral at 62 and the MACD is neutral as well.
As for its fundamentals, GME recently witnessed 2 catalysts in its disappointing Q1 earnings, which has seen the stock plummet 20% in after hours and pre-market trading, and the appointment of Cohen as executive chairman. Given Cohen’s reputation and popularity among investors, GME stock could be poised to soar in the near term.
GME Stock Forecast
Sometimes dips could be a great opportunity to invest which might be the case for GME stock given that Cohen was appointed as executive chairman. Through Cohen’s e-commerce expertise and popularity among investors, GME stock could witness a short squeeze soon as the company might be set to improve its financial situation significantly if it starts to focus on online sales. In this way, GME may return to profitability under Cohen’s guidance which could reflect on the GME stock price.
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