In brief introductory remarks, CEO Ryan Cohen reiterated the company’s plans to focus on cutting costs and increasing profits, and hinted that more store closures may be coming.
“Unprofitable sales and future cash flow projections provide no value to shareholders. This means a smaller store network with an expanded assortment of higher value merchandise that fits into our trade-in model,” Cohen said.
Cohen did not provide details about the company’s future growth strategy. He spoke about the importance of having a “strong balance sheet,” calling it a “strategic advantage,” especially during times of economic uncertainty. As of May 4, GameStop had about $1 billion in cash and cash equivalents on its balance sheet.
“While the future is always uncertain, the past decade of U.S. and global monetary and fiscal policy has been a historic anomaly. The move away from an ultra-low interest rate environment is likely to have unanticipated ripple effects across the economy, including inflation reaching a 40-year high as soon as 2022,” Cohen said.
“With current interest rates, any investment made in today’s economic climate must have a higher standard of return,” he added. “As my father always said, actions speak louder than words. We are focused on increasing shareholder value over the long term. We are not here to make promises or make big claims. We are here to work.”
The event was interrupted by computer problems and postponed until Thursday after interest in streaming was so high that the servers crashed.
GameStop has been thrust back into the spotlight after Reddit mastermind Roaring Kitty, whose real name is Keith Gill, sparked a new trading frenzy. Gill gained notoriety in the online trading world in 2021 for touting a massive GameStop position in both common stock and risky options. Since his return, his GameStop position has grown to more than 9 million shares after liquidating a giant call options position before expiration.
The company’s shares have risen in seven of the past eight weeks after more than doubling in May, and are up about 45% this year.
GameStop is still struggling to transition from buying video games in brick-and-mortar stores to buying them online, and investors are hopeful that Cohen can finally reinvent the company.
The retailer recently raised more than $2 billion in an on-market stock sale as video game companies capitalized on the resurgent meme trend. GameStop said it plans to use the funds for general corporate purposes, including acquisitions and investments.
