GameStop stock (GME) tanked in pre-market trading on Thursday after the company announced the firing of CEO Matthew Furlong and reported quarterly revenue that came in lower than expected.
GameStop announced Furlong's departure as part of its quarterly earnings release on Wednesday evening. The company's largest investor, Ryan Cohen, was named executive chairman.
The video game retailer didn't hold a quarterly earnings call, normally an industry standard, to discuss its recent quarter or the executive change. GameStop's first quarter came in worse than Wall Street had hoped, with revenue of $1.24 billion coming in short of analysts expectations for $1.34 billion.
Shares of GameStop fell more than 20% prior to Thursday's opening bell.
The exit of Furlong marks a shift in GameStop's turnaround efforts. Furlong, a former Amazon executive, had been viewed as someone who could bring GameStop further into the digital marketplace.
Cohen founded Chewy (CHWY) before becoming a popular activist investor amid the meme stock craze. He joined the GameStop board in January 2021 as Reddit users flocked to the stock and sent shares sky rocketing up more than in the month.
Wednesday's announcement said Cohen's responsibilities will include "capital allocation and overseeing management."
Cohen tweeted, "Not for long" less than a half hour after the announcement.
Some Wall Street analysts weren't impressed with GameStop's moves on Wednesday. Wedbush Managing Director Michael Pachter maintained his Sell rating on shares of GameStop and lowered his price target to $6.20 from $6.50.
"We remain convinced that GameStop is doomed, with declining physical software sales and a shift of sales to subscription services and digital downloads sealing its fate," Pachter wrote in a note to clients on Thursday. "While we think that the chain might have some value if run in order to harvest profits, we don’t see a turnaround on the horizon without capable management."
Pachter doesn't see any easy path for GameStop to find a new chief executive, either.
"We think that the lack of clear direction and the callous termination of Mr. Furlong all but ensures that Mr. Cohen will have difficulty attracting a qualified replacement," Pachter wrote.
Josh is a reporter for Yahoo Finance.
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