GameStop Is In Serious Trouble

Things are not looking good for GameStop.

By Jason Collins | Published


Following a decades-long abysmal performance on the stock market, GameStop’s stocks skyrocketed in value by over 6900% when a group of Reddit users orchestrated a short squeeze. The company’s recovery and sudden influx of funds allowed it to invest in Web3 technologies like NFTs and cryptocurrency when it suddenly began laying off its employees without offering much explanation.

According to The Verge, GameStop fired its Chief Financial Officer, Mike Recupero, and initiated yet another round of mass layoffs, firing staff across departments as part of an aggressive turnaround plan. The layoffs were announced in a company-wide memo to employees and are more on the corporate side of things rather than at its stores, signaling the company’s intent to reduce the bloat as GameStop continues investing in other areas.

Another thing worth noting is that the aforementioned layoffs are mostly focused on Grapevine, Texas headquarters, and some staff at the company-owned Game Informer, a decades-old gaming magazine acquired by GameStop at the turn of the millennium. GameStop’s headquarters suffered similar layoffs in May of this year, which saw the departure of over 100 employees across a range of different departments.

The company’s current CEO, Matt Furlong, stated that GameStop, while cutting through management, intends to make significant investments in the company’s frontline workers, referring to those working at brick-and-mortar stores. Unfortunately, the company hasn’t disclosed any details regarding the said investment. Furthermore, it’s also worth noting that, despite the company’s recent financial success, the frontline employees aren’t particularly satisfied with their employment conditions.

Various reports have suggested that workers at GameStop brick-and-mortar stores are routinely complaining about poor working conditions — more specifically, bad pay and burnout —  employees at the Nebraska-based store resigned in protest and told their customers to shop elsewhere. For comparison, the newly-appointed CFO will make approximately $200,000 a year, with bonuses going as high as $1.9 million paid in installments through August 2023, while a GameStop store employee makes less than $15 an hour.

So, any investments into the frontline employee sector would be, presumably, very appreciated by GameStop’s workforce. As far as investors go, the company’s board has approved a 4-for-1 stock split, which will grant owning investors even more share in the company. This won’t have any impact on the company’s value, but it will give the company’s liquidity a significant boost. As a result of this move, the GameStop stock prices have already gone up by 10%, which ended trading at just over $135 per share today.

GameStop struggled for decades but took a pretty significant hit during the 2010s due to a massive shift in video game sales to online shopping and downloads. Not to mention that the company made some pretty bad investment decisions, which plummeted its value to approx. $5 per share. As mentioned before, the orchestrated short squeeze initially boosted the value of its stock by a massive 6900% before the market succumbed to massive manipulation, which ended in controversies and lawsuits.

Eventually, the dust settled, and GameStop has risen from the nearly-dead, operating at full capacity, and investing in future technologies, like crypto — similar to AMC theaters, which was also targeted by the same Reddit group that orchestrated the GameStop short squeeze.