GameStop Swings After New Hires With Chewy Founder on Board
(Bloomberg) — The rally in GameStop Corp. shares showed further signs of losing momentum on Wednesday as the stock limped into the close even after news of a trio of executive hires, including the appointment of a chief technology officer.
The stock closed just 2.7% higher Wednesday at $92.41, after earlier rising as much as 26%. A sell off at the start of the week has wiped out $16 billion in market value from the company.
While the video-game retailer struggled in Wednesday’s session, other parts of the market showed that Reddit-fueled retail traders were still driving double-digit gains for smaller companies, such as Tyme Technologies and Sellas Life Sciences.
Grapevine, Texas-based GameStop announced the appointment of Matt Francis, an Amazon Web Services alum, to its newly created role of chief technology officer, it said in a Wednesday morning statement. It also hired Kelli Durkin as senior vice president of customer care and Josh Krueger to be vice president of fulfillment.
The stock has been the poster child for retail investors looking to squeeze short sellers and that interest has leaked over into other parts of the market. Reddit favorites like headphone maker Koss Corp. and AMC Entertainment Holdings Inc. rebounded Wednesday as the platform’s users encouraged each other to continue fighting back against Wall Street.
The executive additions are the first moves since Chewy Inc. co-founder Ryan Cohen joined the board in January after disclosing a 5.8 million-share stake through his RC Ventures. Durkin has previously worked at Chewy and Krueger has held senior roles at Walmart Inc., Amazon.com Inc. and QVC Inc.
“The new leadership positions seem aligned with the shift to digital that RC Ventures is pushing,” said Joseph Feldman, analyst at Telsey Advisory Group. “The reality is that business will look better this year regardless of any strategic changes because of the new video game console cycle,” including Sony’s PlayStation 5 and Microsoft’s Xbox Series X.
Trading has been volatile over recent weeks for the video-game retailer, which has added about $5.1 billion in value this year despite the recent losing streak. With 42 million shares having changed hands Wednesday, volumes were less than half of what’s been typical over the past two weeks.
Robinhood has been a key driver of retail traders, however restrictions placed on companies including GameStop and AMC have drawn the ire of amateur traders. While those restrictions muted trading volumes in recent days, the mania tied to Reddit and its Wallstreetbets thread are likely here to stay.
“The spotlight on r/wallstreetbets has increased exponentially even though the short squeeze has reversed,” Barclays Plc strategists led by Maneesh Deshpande wrote in a Wednesday note. “Even if the current short squeeze is not likely to result in the win retail investors had positioned for, institutional investors are now more likely to incorporate the impact of retail sentiment and positioning in their portfolios going forward.”
With short sellers pulling bets off the table, the percentage of GameStop shares available that are currently sold short tumbled to 52% from a high of 140%, S3 Partners data show. Despite recent struggles, the stock remains up nearly 400% this year after the community of day traders collaborated on Reddit’s WallStreetBets forum to take on the Wall Street establishment.