GameStop turmoil: An open letter to executive chairman Ryan Cohen

GameStop fired CEO Matthew Furlong earlier this week in a leadership shakeup that also elected activist investor Ryan Cohen as the new executive chairman. Yahoo Finance Executive Editor Brian Sozzi joins the Live show to break down some of the concerns surrounding the company.

Video transcript

- GameStop leadership shakeup saw Ryan Cohen promoted to executive chairman. The Chewy founder, well, co-founder, joined the company's board two years ago. And his cryptic social media presence became a beacon for the Reddit-fueled meme stock craze. Now, he's in charge. And Yahoo Finance's Executive Editor Brian Sozzi has thoughts. Brian?

BRIAN SOZZI: Yeah, I'm continuing my rolling heart attack from yesterday after that analysis of GameStop. So right on the Yahoo Finance homepage right now, I encourage everyone to read it. It is an open letter to executive chairman Ryan Cohen.

I really felt guys this was the time to pull the trigger on something like this. We do not do this normally. But I think it was time. We continue to not hear from Ryan Cohen, no earnings calls, executives leaving out the door.

And as you can see there, he has really significant involvement in GameStop, of course, controls the board, 12% of the company right there. There's a timeline of his involvement. The stock has really cratered over the past year and a half.

Yet as I'm learning here on Twitter again this morning, this guy continues to have major, major support among shareholders that might be losing large sums of money. And I just think it is time we hear from Ryan in some form. Maybe it's live on Yahoo Finance, maybe it's another forum, maybe it's a Twitter spaces with Elon Musk.

Whatever it is, I think investors in GameStop that have been hanging on to this really dog of a company for the past year and a half hear from Ryan and what his plan is. And if he doesn't have a plan, that's fine too. Maybe just get out of the stock and go and get involved and start another company.

But the bottom line is this. And I get it to this in the Morning Brief. I think a lot of these supporters deserve respect. I think Ryan is disrespecting all of these shareholders, and they deserve better than what Ryan Cohen is giving them.

- How-- besides the hate mail that you get--

BRIAN SOZZI: Yes.

- --which is purely anecdotal. What draws you to the conclusion that he still has investor support? I would suggest looking at the stock yesterday, he doesn't have that.

BRIAN SOZZI: And you brought that-- and you brought that up. And that was a great, great point. And I'm just anecdotally, you go into the Reddit chat rooms, I see the vitriol, I guess, coming towards me on Twitter, which I'm cool with it, thick skin for me. Bring it on. I'm very encouraged to hear or just very excited to hear why you continue to support someone that clearly doesn't have your best interests at heart.

But when I dig down to the financials of GameStop, I'm a former analyst for about 12 years. When I dig into the analysts, the finances of this company, the annual reports, the 10-Qs, the 8-K reports, and it's a company that has structural issues. Sales are falling, big losses the past two years, almost $700 million in net losses in 2022 and 2021, $50.5 million loss in the most recent quarter, no long-term prospects.

This is a business really perhaps headed down the drain over the next decade very much like a blockbuster, like a Circuit City, like a Linens 'n Things, even like a Bed Bath & Beyond, which Cohen was involved in a news flash. He did nothing there as well. He had no improvement there.

Bed Bath & Beyond right now is going through a bankruptcy process. They're not going to exist in a couple of months. So I think Ryan Cohen is failing here. The numbers suggest that. The turnstile that has been the executive suite, that would suggest he's failing as well.

He failed at Bed Bath & Beyond to drive any real change. And then he tried to drive change at Nordstrom, and he failed there because the Nordstrom management team is probably some of the best operators in the game. The stock price might not reflect that, but they're a lot better than Ryan Cohen.

- So then what are the options here? When we think of where the meme stock craze started in COVID, a lot of these Redditors getting together trying to save some of these companies that they love. But what does the path forward then look like here for GameStop?

BRIAN SOZZI: Management, careful management, Rochelle, whether that is a orchestrated wind down process or some form of rolling liquidation over the next 15 years, it is very easy to see, at least in my humble view, where this is all going. You have increasing digital downloads of games. Ryan Cohen has still not given people the average consumer out there that may go to Target on the weekend to buy groceries. Any form of reason to go into a GameStop, this is a company that still operates over 4,000 stores and has millions of dollars of operating lease obligations on the balance sheet. And I think in order for GameStop to truly involve, maybe they just need to start selling fruits and vegetables, guys. Eggs.

- Eggs, yeah. Is that what--

BRIAN SOZZI: Yes.

- OK, we'll see if--

BRIAN SOZZI: Maybe Ryan will do that. I encourage Ryan to come on Yahoo Finance and stop hiding behind the shadows. Let's hear your plan, man.

- Yeah, go in for a game, pick up some carrots. I like it.