GameStop shares shot up on Monday after the company announced plans to search for a new chief executive officer to help accelerate the company’s transformation into a digital retailer.
GameStop CEO George Sherman will step down on July 31 or sooner depending on the appointment of a successor, the company said. The retailer’s board will lead the search for a CEO “with the capabilities and experience to help accelerate the next phase of the company’s transformation,” the company said.
Shares of GameStop — a favorite of the Reddit-fueled stock rally that took the nation by storm by earlier this year — jumped more than 9 percent on the news to about $169 Monday morning.
Some investors were also cheered by news that popular GameStop investor Keith Gill recently doubled down on his bet in the video game retailer. Gill said he exercised his 500 GameStop call options contracts when they expired on Friday, resulting in 50,000 more shares at a strike price of $12.
Gill, a major influencer on Reddit chatroom WallStreetBets, would have pocked more than $7 million had he chosen to sell his options at Friday’s price.
Small investors like Gill have been buying up the stock — driving it to dizzying heights — on a bet that Ryan Cohen, former CEO of online pet supplies retailer Chewy, will revive the Texas retailer.
Cohen, who took a stake in GameStop last year, has been pushing to transform the company from a brick-and-mortar business to a seller of digital games. Cohen, who will become chairman of the retailer this summer, has been shaking up the executive ranks in the process, adding new executives from Amazon and Chewy.com to replace former GameStop executives including its chief financial officer and chief customer officer.
Cohen on Friday thanked Sherman for his leadership, noting that the exec “took many decisive steps to stabilize the business during challenging times.”
Sherman, who joined GameStop two years ago, was charged with turning around the company’s business at a time when gaming console sales are declining and most gamers are downloading games versus buying them in stores. When he joined, Sherman announced plans to downsize GameStop, shuttering up to 200 stores.
But the CEO didn’t get far in enacting his plan when the pandemic hit, upended the retail landscape.
Cohen swooped in and took a stake in late 2020, which excited amateur traders who congregated on Reddit’s WallStreetBets chat group. In January, GameStop became the poster child for a new revolution pitting the amateur investors against Wall Street hedge funds, who were betting the retailer’s stock would crater.
GameStop’s stock has rallied more than 700 percent this year– even though shares are trading nearly 70 percent below the Reddit-jolted all-time high from late January.
Meanwhile, Cohen has become more involved in the day-to-day operations at GameStop, hiring several executives from Chewy and Amazon to help guide the company’s makeover, and streamlining customer service and other operational problems.
Cohen’s work seems to be paying off. Although overall revenue in GameStop’s most recent quarter fell 3.3 percent and was below Wall Street expectations, online sales more than doubled. The company said e-commerce now makes up more than a third of sales, up from just 12 percent in the fourth quarter a year ago.