With a roster of new executives on deck, video game retailer GameStop (GME) is gearing up for a turnaround. But for investors, that new direction is as yet unclear.
Shares of GameStop sank by more than 22% intraday on Thursday, pacing toward their worst day since March even after the company reported first-quarter results that topped estimates. Sales grew by a better-than-expected 25% to $1.28 billion, while adjusted losses narrowed to 45 cents per share, compared to losses of $1.61 per share during the same period last year.
The release coincided with the company's announcements that it appointed a new chief executive officer and chief financial officer, planned to sell more shares and was being investigated by the U.S. Security and Exchange Commission over trading activity. Earlier Wednesday, GameStop shareholders also voted Ryan Cohen, co-founder of the e-commerce platform Chewy (CHWY), as chairman of the board.
But amid the flurry of updates, GameStop left a glaring omission — namely, its plan to transform the company into a formidable retail competitor, according to at least one Wall Street analyst.
"We don't know where GameStop is headed but it's clear that they intend to remake themselves as an Amazon-lite," Wedbush analyst Michael Pachter told Yahoo Finance on Thursday. "And Ryan Cohen promised investors a strategy back in mid-January. It's been nearly five months and we haven't seen that yet."