American Video game company GameStop on Thursday informed media houses that company was terminating employment of chief financial officer Michael Recupero.
Recupero, who was previously a chief financial officer and vice President of Amazon’s North American consumer business, was hired by GameStop in July last year. At GameStop, he was responsible for coordinating the financial activities of the company and similar financial operations.
Michael Recupero will be replaced by Chief Accounting Officer Diana Saadeh Jajeh who is with the company for the last two years.
Following the announcement of the termination of the CFO, the share prices of GameStop Corp on New York Stock Exchange tanked by nearly 8% in extended trading.
Memo from CEO
According to a report by Axios, the Chief Executive Office of the company Matt Furlong in a memo to employees stated that the gaming company would be laying off employees (still unsure about how many) in order to attain sustained profitability over the time.
Company had hired nearly 600 workers in last year and first half of this year combined.
Matt Furlong added that the leaders of the business entity is now in a batter position to understand what was the transformation needs of the company and what was to be done.
He said that all employees in the company should become more hands on . Everyone would also have a higher level of accountability as the company is going through trying times.
According to CEO of the GameStop, company has huge potential to grow, and he is fully confident with his team and their works.
Axios also reported that there will be lay-offs in Game Informer, which is a magazine owned and operated by GameStop.
GameStop had earlier hired various highly experienced officers and officials in order to give the organisation a rejuvenated outlook. That is how Matt Furlong, who was head of Amazon Australia landed up in GameStop as Chief executive officer.
GameStop has not so far made any statements or comments regarding future plans of the company.
The company also launched a digital asset wallet in May to store, send, receive and use cryptocurrencies and non-fungible tokens.
GameStop short selling in January 2021
GameStop made it to the headlines of news in January 2021 as a stock-buying spree by a Reddit community named r/wallstreetbets led to an increase in the share value of the company by nearly 1500%. The share price reached an all-time high of 483 dollars per share in intraday trading.
Various institutional investors, hedge funds and short-sellers were planning to target shares of GameStop, which was then reeling in financial issues. They were planning to short squeeze and sell the shares of the gaming company.
A subreddit community decided to act against this short-selling strategy of hedge funds and short-sellers, hence started buying GameStop shares. This led to an increase in the share value of the gaming company. In order to cover the financial positions and possible losses, hedge funds flushed more cash into the trade, which resulted in even more increase in the share value.
By end of the month, hedge funds and intuitional investors started letting go of the short-selling strategy on GameStop as the losses were huge. By the first week of February 2021, the share prices started falling and coming back to normal.
In 2022, renowned American investment management firm Melvin Capital Management LP announced they will be closing their funds and returning the investment amounts to investors. Melvin Capitals had to face a huge loss during the GameStop short squeeze.