GameStop falls more than 12% CEO plans to cut costs and reduce physical store network
Ryan Cohen, CEO of GameStop, has announced plans to cut costs and reduce the physical store network. Despite high expectations for the CEO's speech, the stock price still fell by 12%. GameStop has strengthened its financial position through stock sales, with a strong balance sheet, but Cohen mentioned economic uncertainty and potential inflation issues. In addition, investor Keith Gill has become a hero among Reddit users for his bullish bets on GameStop. The stock has risen by 43% since the beginning of this year
According to the financial news app Zhitong Finance, Ryan Cohen, CEO of GameStop (GME.US), stated that the video game retailer plans to cut costs and reduce its physical store network, but this has not stopped the stock price from falling.
In a highly anticipated speech at the company's annual meeting, Cohen stated that the company will continue to cut costs and focus on profitability. He said, "Revenue without profit and future cash flow prospects is worthless to shareholders. This means we will reduce the physical store network and expand the range of high-value items suitable for trade-ins."
Shortly after the meeting, GameStop's stock fell by 12% to $25.17. At the close of Monday, the stock fell by 12.13% to $25.22.
Cohen praised the company's balance sheet, stating that since the surge of meme stocks in January 2021, the company has strengthened its capital through a series of stock sales. Recently, the company sold 45 million shares in May and another 75 million shares in June, raising a total of $3 billion.
Cohen said, "Having a strong balance sheet is particularly important in times of economic uncertainty. Although the future is always uncertain, the monetary and fiscal policies in the United States and globally over the past decade have been historically exceptional. Exiting the ultra-low interest rate environment may have unforeseen repercussions on the economy, as seen in 2022 when inflation reached its highest level in 40 years."
Cohen's speech was brief. Since taking over GameStop, the co-founder of Chewy (CHWY.US) has been known for not providing analysts or investors with too much information. The company has not provided full-year financial outlook for many years.
GameStop has risen by 43% since the beginning of this year.
In May, investor Keith Gill became a hero among Reddit users for his bullish bets on GameStop before the meme stock frenzy in January 2021, reigniting interest in these companies through his posts under the Roaring Kitty account. According to his posts on Reddit, as of June 13, he held over 9 million shares, up from 5 million at the beginning of the month. His previous call options allowed him to buy the stock at $20