On June 12, 2024, traders worked in the trading floor of GameStop at the New York Stock Exchange (NYSE) in New York City, the United States.
Brendan McDermid | Reuters
game station Shares fell to session lows on Monday after the company’s much-anticipated annual meeting failed to provide any concrete updates on the video game retailer’s future plans.
Meme shares fell about 12% after the company ended its rescheduled shareholder event without commenting in detail on its strategy. The meeting lasted about 30 minutes and no shareholders asked questions. Shares fell 17% to $23.79.
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In brief introductory remarks, Chief Executive Ryan Cohen reiterated the company’s plans to focus on cutting costs and improving profits and hinted that more store closings may be on the horizon.
“Unprofitable revenue and the prospect of future cash flow has no value to shareholders. This means a smaller store network and an increase in the variety of high-value merchandise that fits our trade-in model,” Cohen said.
Cohen did not provide further details about the company’s future growth strategy. He talked about the importance of having a “strong balance sheet” and called it a “strategic advantage” – especially in times of economic uncertainty. As of May 4, GameStop had about $1 billion in cash and cash equivalents on its balance sheet.
“While the future is always uncertain, the past decade of U.S. and global monetary and fiscal policy has been a historic anomaly. Exiting an ultra-low interest rate environment could have unforeseen repercussions across the economy, as inflation The blow is the same.
“At current interest rates, investments made in today’s economic environment must endure a higher return threshold,” he added. “As my father always said, actions speak louder than words. We are focused on building shareholder value over the long term. We are not here to make promises or hype, we are here to work.”
The event was disrupted by computer problems and postponed on Thursday after the servers crashed due to overwhelming interest in the live broadcast.
GameStop is once again in the spotlight as Reddit kingpin Roaring Kitty, whose legal name is Keith Gill, launches another trading frenzy. In 2021, Gill gained notoriety in the online trading world for holding large common stock and risky option positions in GameStop. Since returning to the stage, he has exited a huge call option position before expiration, and his position in GameStop has topped 9 million shares.
The stock has gained seven of the past eight weeks after more than doubling in May. Year to date, it’s up about 45%.
GameStop is still trying to transition toward online gaming and away from physical video game purchases, and investors are counting on Cohen to eventually reinvent the company.
The video game company has capitalized on the resurgent trend and recently raised more than $2 billion in market share sales. GameStop said it intends to use the funds for general corporate purposes, which may include acquisitions and investments.
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