GameStop Massively Recruits Amazon Executives... Will It Escape the Meme Stock Image?

Promotion of Digital Transformation Strategy... Experts Express Skeptical Views
Stock Price Drops 7% in Over-the-Counter Trading Following Large-Scale Paid-in Capital Increase News

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Suhwan] GameStop, which was known as a so-called Meme Stock (stocks popular on online communities) and saw its stock price surge over 1000% last January, is aggressively recruiting executives from the U.S. e-commerce giant Amazon as part of its digital transformation strategy.

On the 9th (local time), GameStop announced that it had appointed Matt Furlong, who oversaw Amazon's Australian operations, as its new Chief Executive Officer (CEO), and Mike Recupero, who was responsible for finance in Amazon's North American division, as its Chief Financial Officer (CFO).

With this, GameStop has filled its top management positions with Amazon executives following the recruitment of several Amazon executives over the past few months. Previously, GameStop appointed Amazon executives as its Chief Operating Officer (COO), Chief Growth Officer, and Chief Technology Officer.

Since the COVID-19 pandemic last year, as people spent more time indoors, the number of gamers increased, leading to a rise in sales and stock prices across the gaming industry. However, despite this gaming industry boom, GameStop did not benefit and has closed over hundreds of offline stores to date, recording a loss of $215 million last year.

Ultimately, GameStop’s strategy of recruiting talent from e-commerce companies is interpreted as a commitment to drive its digital transformation strategy to shed its Meme Stock image and gain full recognition of its business value.

Earlier, activist investor Ryan Cohen, co-founder of pet supplies company Chewy, became the largest shareholder by purchasing a large amount of GameStop stock since the end of last year and declared that he would strengthen GameStop’s digital business. He was also officially elected as the chairman of GameStop’s board of directors on the same day.

However, there are skeptical views about this talent recruitment strategy. Anthony Chukumba, an analyst at Loop Capital, appeared on CNBC and said, "GameStop’s problem is not closely related to the e-commerce business," pointing out that "in an era where gamers prefer digital downloads, GameStop’s pursuit of an integrated online and offline distribution strategy is the fundamental issue."

He also remarked, "Even if you bring in Jeff Bezos (Amazon’s CEO), there will be no change."

Meanwhile, GameStop announced in its earnings report that its first-quarter revenue reached $1.28 billion, a 25% increase compared to $1.16 billion in the same period last year. It also recorded an operating loss of $66.8 million, significantly reducing the deficit from $165 million in the previous year.

However, the company did not provide future profit forecasts and announced plans to conduct a paid-in capital increase of up to 5 million shares, which dragged down the stock price. On the same day, GameStop’s stock closed at $282 in after-hours trading on the New York Stock Exchange, down 6.8% from the previous trading day.