GameStop Fires Its CEO; Meme Stock Investor Ryan Cohen Takes Over

An anonymous reader quotes a report from The Verge: GameStop has fired CEO Matt Furlong, the company announced as part of its first quarter 2023 earnings on Wednesday. There's no immediate replacement, though board chairman Ryan Cohen has been appointed executive chairman, the company said in a short press release about Furlong's firing. Cohen, who founded the e-commerce site Chewy, has invested in a number of "memestocks" including GameStop and Bed, Bath and Beyond. His surprise sale of Bed, Bath, and Beyond stock in 2022 raised eyebrows and led to at least one lawsuit accusing him of pumping and dumping the stock. His initial investment in GameStop back in early 2021 led to an enormous rise in the stock and contributed to its status as a memestock beloved by the Reddit sub r/wallstreetbets.

Matthew Furlong was fired on June 5th without cause, the company wrote in the 10-Q. Furlong started at GameStop in June 2021 -- which was after the beginning of the chaos with GameStop's stock price -- and he oversaw things like the company's move into NFTs, November layoffs, and firing the company's CFO. GameStop has also made Mark Robinson the company's new "principal executive officer" with a title of general manager, according to a form 10-Q from the company. Robinson has been at GameStop for nearly eight years, according to his LinkedIn, and he most recently served as the company's general counsel. GameStop canceled its earnings call today. Shortly after the news broke, Ryan Cohen tweeted: "Not for long".

"This one guy" caused the stock boom?

[Rujiel]

Of course, not pictured here is the main driver of its price boom in 2021: investors like Melvin capital who were shorting more GME stock than there actually was in circulation, intending to bankrupt the company and not eat their shorts. But somehow the "chaos" is attributed here to those who simply wanted to buy the stock, and who were prevented from doing so by the likes of Robinhood to cover for said investors.

Re:

[Ed Tice]

Shorting shares of a company has no effect on that company's financial performance. Earnings are a function of the performance of the underlying business. You can't bankrupt a company by shorting the stock. A company gets bankrupted by not running a loss-making business. In the medium-term, speculation has a net-zero effect on stock prices. For every sale there must be a purchase and vice versa.

A short-seller would not want their actions to drive the price of the stock down. The want the price to g

Re:"This one guy" caused the stock boom?

[GBH]

Must be great to live in your imaginary world. Allow me to educate.

So short seller attacks are a thing and at the higher level they're called "Short and Distort"

https://www.2iqresearch.com/blog/short-seller-attacks-what-are-they-and-why-are-they-important

This is not some fantasy and contrary to your claims it's a tactic used by short sellers to increase profit. They do suggest in this article it's also to protect investors but I suspect altruistic short selling is virtually non-existent in reality.

Then there's the short selling designed to bankrupt companies. This comment on the SEC site sums it up pretty well

https://www.sec.gov/comments/4-627/4627-95.pdf

You do everything in your power to hit the reputation of the company you're shorting and then finance dries up, confidence wanes, investment becomes difficult to get and you can't grow. This is especially true in any industry with a high barrier to entry. There are even examples of hedge funds embedding rogue staff in companies to spy and trojan horse the companies from the inside.

Then there's naked short selling where you're shorting more shares an actually exist which hugely distorts the price as without true supply demand price discovery doesn't exist.

https://www.marketwatch.com/story/why-naked-short-selling-has-suddenly-become-a-hot-topic-11674503568

Considered a taboo in the industry for years and claims from Wall Street that it didn't exist for a long time but it's there and it's existence (and prevalence) pretty well accepted by everyone now.

Finally there's the outright illegal cellar boxing

https://news.investorturf.com/how-market-makers-are-naked-short-selling-stocks-known-as-cellar-boxing

Cellar boxing is a thing for years and years and it's been shown to happen countless times. Just because something sounds like a conspiracy theory doesn't mean it's not true.

So please stop being so naive and believing the market isn't crooked as hell. Short selling in isolation and in its purest form will not bankrupt a company provided you ignore ALL the ridiculously shady wrappers around it. Sadly, when you consider distortion, fraud, lies and naked short selling (stealing a phrase from the Big Short) "it's dogshit wrapped in catshit".

Re:

[GlobalEcho]

...This is not some fantasy and contrary to your claims it's a tactic used by short sellers to increase profit. They do suggest in this article it's also to protect investors but I suspect altruistic short selling is virtually non-existent in reality.

I mostly disagree with your assessment, but this sentence is gold.

...Then there's naked short selling where you're shorting more shares an actually exist which hugely distorts the price as without true supply demand price discovery doesn't exist.

In the electronic era, a little bit of naked shorting does still exist, partially due to code bugs similar to the one that cost Goldman a $3MM fine this spring. But naked shorts are easy for regulators to detect. Naked shorting is just not in volumes significant enough to affect market price. At least for companies worth writing about -- i.e. with nontrivial market capitalization, outside the "pink sheets" / penny stocks which are the appa

Re: "This one guy" caused the stock boom?

[reanjr]

Are you claiming GameStop didn't have massive naked shorts? Or are you claiming the regulators ignored them? The first implies you don't have a clue, the second implies your point is undermined by the lack of enforcement.

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[alvinrod]

The obvious counter to naked shorts (or why sane people would want to stay away from them) is what happened with GameStop where a different group bought up the shares and tried to drive the price up artificially. Now the short sellers we caught in the vice and they were the ones being bled.

The stock price of a company should generally reflect what the market considers it to be worth, but that can be tied to reasons outside of the company's financials. Shorts need to exist as a way to stop people from try

Re:

[GBH]

You are the poster child for confirmation bias.

I used to be like you and believe all the corporate and Wall Street bullshit, I really did. I used to think that there were checks and balances in place to ensure that things like naked shorting could be and would be trivially detected too. That the likes of RegSHO and other FTD mechanisms ensured that naked shorts couldn't stay hidden. Then I learned about all the scams and loopholes companies use to avoid their FTD requirements - and here's a hint, there's a

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[Ed Tice]

Short-selling is a form of arbitrage and, like all arbitrage, quickly closes itself. Anybody who successfully drives the price of a stock down shirt-term via shorting (with our without distorting) had better exit that position awfully quickly. Because, if they are wrong, the stock is now a bargain and others will gladly buy it at the discounted price. And when it's time to cover that short position, they will get squeezed. That's what happened with GME (although in this case the squeeze was somewhat art

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[thegarbz]

But somehow the "chaos" is attributed here to those who simply wanted to buy the stock

Yes the chaos is absolutely attributed to those buying. Shorting stock en-mass has no impact on a company. It doesn't affect their financials. In fact it would largely have gone unnoticed and not moved the stock market at all were it not for a bunch of people who figured it out and managed to make a movement to short-squeeze.

Melvin capital was a required condition for the chaos. It was not the cause of it.

Re: "This one guy" caused the stock boom?

[reanjr]

That's a very archaic way of viewing the stock market that hasn't really been true for a while. The reality is financial news bleeds into the public discourse and has an impact on a company's sales. Some companies are more affected than others. For example, if you are an insurance provider, your stock price will absolutely affect your bottom line because no rational person buys insurance from a company whose stock is tanking.

More contemporaneously, we just witnessed several banks get wiped out not because o

Re:

[Beyond_GoodandEvil]

That's a very archaic way of viewing the stock market that hasn't really been true for a while. The reality is financial news bleeds into the public discourse and has an impact on a company's sales. Some companies are more affected than others. For example, if you are an insurance provider, your stock price will absolutely affect your bottom line because no rational person buys insurance from a company whose stock is tanking.
You're not wrong about share price having an effect on general faith and trust in

Re: "This one guy" caused the stock boom?

[reanjr]

The banks would have been fine if there was no run. Sure, they didn't properly plan for a run, and that was also required for them to fail. But the trigger for the run was a falling stock price. So, no, the cause and effect are not backwards.

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[Holi]

That's valid for most companies, but it's not like Gamestop was losing trust due to shorting, their stores were bare and it was obvious to anyone going in their store that they were heading the way of Radio Shack.

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[Holi]

Well, the story was more then just "non-professionals get involved". It was non-professionals conspired to work together to drive the stock price far above the companies actual value. WSB did manipulate market in regards to Gamestop, though according the the SC no laws were violated.

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[Rujiel]

Credit Suisse was short 216 million (!) shares of GME and was able to hide it with a third party financial entity using something called a "bullet swap". It came due two years later, and then you know what happened

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[Holi]

Gamestop was well on it's way to bankruptcy regardless of shorts. If you removed their meme status they would be headed that way still. Have you been in their stores?

Can't be worse

[stikves]

They have made shopping quality at GameStop somehow decline even more after the pandemic.

Want to buy online? $79 minimum for free shipping. Yes, even if you have their yearly subscription.
Those monthly coupons? No, you can't use them with *any* deals, if you try, you get the $5 off from coupon, not the $25 off from the deal.
"New" games? Ah, maybe they will come unboxed. You know the "display" models other shops sell at discount.
Did I say, this also happens for online shoppers? They started shipping some ite

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[codebase7]

I'd say their biggest problem is not having stock to sell in the first place. Neither new stuff nor the old. I can't count how many times I've had to pre-order something just to be able buy it from them sometime within a year of the game's release date. Never-mind the fact they only keep games for N and N-1 systems around. They got rid of everything else years ago. With a "well it might be on our website..." attitude* being the excuse for the removal. (Of course the real reason was they wanted more room o

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[Merk42]

I'd say their biggest problem is not having stock to sell in the first place. Neither new stuff nor the old. I can't count how many times I've had to pre-order something just to be able buy it from them sometime within a year of the game's release date.

Isn't this sometimes the 'fault' of the publisher for not being able to make enough copies? Especially true for hardware.

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[codebase7]

In some cases yes, but in my case I've seen local retailers like WalMart, Best Buy, Target, and even some mom and pop shops have copies of said games when Gamestop hadn't had any in since the initial pre-orders. Not just some niche game either. One case in particular was Metroid Dread. The local GS didn't have it in stock for 3 months after release day, WalMart had a new shipment 2 weeks after release (and every week after).

To a certain extent I think GS had been doing this intentionally to push up pre-or

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[farble1670]

Newsflash to all retailers: If I take the fucking time to drive to your physical store, I expect to walk out of it with the item I wanted in hand. No item in stock means no sale. FULL STOP

Yes. I'd say in the last decade, every time I got the bad idea of looking for a product at a B&M I returned home 2 hours later without the product, wondering how I could get that 2 hours of my life back.

The real question is why anyone would visit a GS. Nostalgia? Every modern system has online purchase and even if you want the box you can get it on Amazon in a day or 2.

Is this company even relevant anymore?

[King_TJ]

All of this "meme stock" stuff aside? It seems to me GameStop has a fundamental problem of no longer serving a useful purpose, selling what it was created to sell?

Both the XBox and the Playstation have gone towards a business model of purchasing digital game content to download over broadband and install on their hard drives, vs requiring buying physical media on optical disc. And as the "vintage" game console have gotten older, they've become more of a product sold by hundreds of small, independent gaming

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[Holi]

yes

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[King_TJ]

Thanks for that descriptive explanation. It's now clear to me that either you're saying, "Yes, today's GameStop is about as useful as a Blockbuster video store.", OR you're saying yes, they're still relevant.