GameStop shares fall over 20% after CEO exit and revenue miss

GameStop, the video game retailer that became the focus of a market frenzy earlier this year, saw its shares fall over 20% on Thursday after the company posted a revenue miss and announced the departure of its CEO, George Sherman. The company reported fiscal first-quarter revenue of $1.28 billion, falling short of analysts’ expectations of $1.36 billion. The company’s net loss for the quarter was $66.8 million, or $1.01 per share, also worse than expected.

Sherman will step down by July 31 or earlier if a successor is found, the company said. The shakeup in leadership comes after Ryan Cohen, co-founder of online pet food retailer Chewy, joined GameStop’s board in January and began pushing for a digital transformation of the company.

Many retail investors had poured into GameStop shares earlier this year, betting against hedge funds that had shorted the stock. The company’s shares rose more than 1,600% in January, fueled by small investors on Reddit and other social media platforms. The surge in share prices led to a short squeeze that cost hedge funds billions of dollars.

Some analysts say GameStop’s earnings miss and leadership shakeup are signs that its turnaround strategy may be faltering. Others believe the company still has long-term potential as it shifts its focus to digital sales and e-commerce.