×

Subscribe Today

Get our free articles delivered directly to your email!

Continue reading

Second Executive Departs in Two Months at GameStop – C-Suite Transitions

  • August 3, 2023

Just weeks after GameStop (GME) bid adieu to its fifth CEO in five years, we have yet another executive departure. This time it is the CFO that is leaving. For background on recent developments at GameStop including how it became a meme stock darling and the Ryan Cohen connection, check out our last article titled Fifth CEO Exit At GameStop In Five Years – C-Suite Transitions. While not the most profitable short position in the InsideArbitrage model portfolio, GameStop has generated gains of 49.50% in the portfolio.

Welcome to edition 52 of C-Suite Transitions, a weekly series on InsideArbitrage that tracks appointments and departures at publicly traded companies during the prior week. We highlight five appointments and departures each week by picking the largest companies from the full list of management changes.

Sudden Departures

  1. MAT: On July 21, 2023, Mattel’s President and Chief Operating Officer, Richard Dickson, informed the company that he will step down from his position effective August 3, 2023, to take the role of President and Chief Executive Officer at another public company.
  2. GME: On July 21, 2023, GameStop’s Chief Financial Officer Diana Saadeh-Jajeh informed the company that she will resign effective August 11, 2023.
  3. WBA: On July 21, 2023,  Walgreens Boots Alliance’s Global Chief Financial Officer  James Kehoe informed of his decision to resign from his position effective on July 27, 2023, in order to pursue a new opportunity.
  4. USEG: On July 28, 2023, U.S. Energy’s Chief Operating Officer Donald A. Kessel informed U.S. Energy of his retirement effective July 28, 2023.
  5. DELL: On July 27, 2023, Dell Technologies announced Co-Chief Operating Officer Anthony Charles Whitten agreed that Mr. Whitten will resign from his position effective as of August 18, 2023.
  6. LFMD: On July 28, 2023, LifeMD’s President Alex Mironov voluntarily resigned from his position in connection with his appointment as a Managing Director of Rothschild & Co.
  7. GHSI: On July 25, 2023, Guardion Health Sciences Chief Accounting Officer Jeffrey Benjamin notified the company that he was resigning from his position effective July 25, 2023.
  8. BHE: On July 31, 2023, Benchmark Electronics Chief Revenue Officer Robert Crawford announced the retirement effective August 21, 2023.
  9. FREQ: On July 28, 2023, Frequency Therapeutics Chief Scientific Officer  Christopher Loose notified the company that he would be resigning from his position.
  10. EZFL: On July 25, 2023, EzFill Holdings Chief Financial Officer Arthur Levine notified the company that he resigns effective July 25, 2023.
  11. INGN: On July 27, 2023, Inogen and Chief Commercial Officer George Parr mutually determined that Mr. Parr would separate from the company on or before July 31, 2023.
  12. ALRS: On July 24, 2023, Alerus Financial Corporation’s Chief Accounting Officer Jerrod K. Hanson notified the company of his intention to resign from his position effective August 18, 2023.
  13. CNP: On July 21, 2023, CenterPoint Energy’s Chief Accounting Officer Kara Gostenhofer Ryan informed the company of her decision to resign effective as of August 11, 2023, to pursue another career opportunity.
  14. TSE: On July 20, 2023, Trinseo PLC’s Chief Accounting Officer Bernard Skeete informed of his decision to resign from his position to pursue a new opportunity, effective August 4, 2023.
  15. VACC: On July 20, 2023, Vaccitech’s Chief Medical Officer  Dr. Margaret Marshall intends to retire from her position effective immediately.
  16. ATER: On July 26, 2023, Aterian’s Chief Executive Officer Yaniv Sarig notified Aterian of his decision to resign  effective as of July 26, 2023
  17. TRS: On July 24, 2023, Trimas Corporation’s Chief Accounting Officer tendered his resignation, effective August 11, 2023, to pursue other career opportunities.

GameStop (GME): $21.50

Executive Departure

Following the recent termination of Matthew Furlong’s employment with the company as its President and Chief Executive Officer, GameStop in an SEC filing mentioned:

Leadership transitions can be inherently difficult to manage, and failure to timely or successfully implement transitions may cause disruption within the Company, including execution of our transformational plans. This may adversely impact our financial performance and ability to meet operational goals and strategic plans, our ability to retain and hire other key members of management, and the market price of our Class A common stock.

This situation leaves GameStop without a CEO and a CFO.

Recently we wrote about the sudden termination of Matthew Furlong’s position as President and CEO at GameStop without cause. The company did not provide a reason for Mr. Furlong’s termination. He also resigned from his position as a director of GameStop. Mr. Furlong’s resignation is the company’s fifth CEO exit in the last five years, following Michael K. Mauler, Dan DeMatteo, Shane Kim, and George Sherman.

At present, GameStop operates without an official CEO. Ryan Cohen has taken on the role of Executive Chairman, overseeing the company’s affairs until a new CEO is selected.  In the previous month, GameStop named Mark Robinson as the Principal Executive Officer and General Manager. Mr. Robinson had been the company’s Vice President and General Counsel since January 2022.

GameStop Price Chart

On July 27, 2023, GameStop Corp. (GME) announced that Chief Financial Officer Diana Saadeh-Jajeh will be resigning from her role on August 11, 2023. GameStop also added in the filing that the resignation was not the result of any disagreements with the company regarding its operations, policies, or practices, including accounting matters. Ms. Diana Saadeh-Jajeh has been GameStop’s CFO for only a year.

CFO Diana Saadeh-Jajeh

In 2022, when GameStop Corp (GME) terminated Chief Financial Officer Michael Recupero as part of a turnaround effort, Diana Saadeh-Jajeh was promoted to the role of Chief Financial Officer.

She joined GameStop in 2020, initially taking on the role of interim CFO and CAO. Subsequently, she assumed the position of the company’s Chief Accounting Officer on a permanent basis in 2021.

Daniel Moore

GameStop appointed Daniel Moore as its Principal Accounting Officer and interim Principal Financial Officer, effective as of August 11, 2023. Mr. Moore has served as the company’s Corporate Global Controller since September 2022, and as Vice President, Global Tax since July 2021.

Prior to joining the company in 2021, Mr. Moore held the position of Vice President, Tax at Elevate Textiles, and Director of International Tax at Roper Technologies.

Insider Transactions

In July, GameStop Chief Operating Officer Nir Patel sold 122,073  shares of GME at an average price of $22.44 and $23.27 totaling $2.75 million. These shares were sold to cover applicable withholding taxes in connection with the vesting of restricted stock units. Chief Financial Officer Diana Saadeh-Jajeh also sold 10,484 shares at an average price of $23.27 totaling  $243.931.

GameStop Insider Transactions
Source: InsideArbitrage

GameStop Removes Crypto Wallets

Last year, GameStop introduced a digital asset wallet designed for the storage, transfer, receipt, and utilization of cryptocurrencies and non-fungible tokens (NFTs). This wallet allows users to manage crypto and non-fungible tokens (NFTs) throughout decentralized apps and enable transactions in GameStop’s NFT marketplace.

GameStop (GME) has now said it will remove its support for crypto wallets citing regulatory uncertainty in the United States. The action follows recent efforts by US legislators and regulators to target cryptocurrency-related businesses, including Coinbase and Binance, which were both sued by the SEC.

Valuation

GameStop’s stock is down almost 40% percent over the last year. The company has a market cap of $6.55 billion, an enterprise value of $5.89 billion on account of $660M of net cash on the balance sheet, and trades at an EV/Sales ratio of 1.02. Operating income and net income were both negative for the trailing twelve months. Short interest at 19.44% is high and a red flag.

GME profitability Grade
Source: Seeking Alpha

Q1 2023 Results:

  • Revenue: $1.24 billion, reflecting a 10.1% YoY decline.
  • Selling, general, and administrative expenses: $345.7 million, representing 27.9% of net sales, down from $452.2 million or 32.8% of net sales in the prior year.
  • Net loss: $50.5 million, showing an improvement from the net loss of $157.9 million in the previous year’s first quarter.
GameStop reported that it will not host a conference call to discuss its performance for the current quarter with investors.

Conclusion

To say that GameStop is a troubled company would be an understatement. The core business is in decline, executive turnover continues and efforts by the company to expand to crypto/NFTs have failed. The key risk to short sellers is not that the business manages to turn itself around by pivoting to online gaming or by benefiting from a console refresh cycle but the completely unpredictable nature of people on the other side of the trade as depicted in the movie Dumb Money, which I look forward to checking out when it is released.

Appointments 

1. O`Reilly Automotive (ORLY): $918.46

On July 26, 2023, O`Reilly Automotive announced that Brad Beckham, the company’s Co-President, will succeed Greg Johnson as CEO upon Mr. Johnson’s retirement effective January 31, 2024.

MarketCap: $55.48BAvg. Daily Volume (30 days): 405,079Revenue (TTM): $15.22B
Net Income Margin (TTM): 14.84%ROE (TTM): -165.14%Net Debt: $7.06B
P/E: 25.50Forward P/E: 24.88EV/EBIDTA (TTM): 18.15
P/S (TTM): 3.83P/B (TTM): N/A52 Week Range: $680 – $975.72

2. Carlisle Companies (CSL): $278.31

On July 26, 2023, Carlisle Companies appointed Stephen P. Aldrich Vice President & Chief Accounting Officer succeeding Kelly P. Kamienski in those roles effective August 1, 2023.

MarketCap: $13.86BAvg. Daily Volume (30 days):Revenue (TTM): $6.02B
Net Income Margin (TTM): 12.04%ROE (TTM): 26.32%Net Debt: $2.20B
P/E: 18.61Forward P/E: 16.39EV/EBIDTA (TTM):  12.03
P/S (TTM): 2.40P/B (TTM): 4.5852 Week Range: $202.94 – $314.95

3. PTC Inc (PTC): $143.75

On July 26, 2023, PTC announced that Neil Barua will be appointed Chief Executive Officer of PTC effective February 14, 2024.

MarketCap: $17.08BAvg. Daily Volume (30 days): 715,062Revenue (TTM): $2.06B
Net Income Margin (TTM): 14.90%ROE (TTM): 12.90%Net Debt: $1.64B
P/E: 55.76Forward P/E: 28.09EV/EBIDTA (TTM): 32.81
P/S (TTM): 8.47P/B (TTM): 6.6752 Week Range: $101.82 – $152.09

4. Lincoln Electric Holdings (LECO): $197.73

On July 21, 2023, Lincoln Electric Holdings announced in connection with Mr. Mapes’ notification of his retirement, the Board elected Steven B. Hedlund, as President and Chief Executive Officer, effective as of January 1, 2024.

MarketCap: $11.35BAvg. Daily Volume (30 days): 351,616Revenue (TTM): $3.97B
Net Income Margin (TTM): 12.04%ROE (TTM): 45.18%Net Debt: $949.5M
P/E: 24.18Forward P/E: 22.22EV/EBIDTA (TTM): 17.22
P/S (TTM): 2.95P/B (TTM): 9.5652 Week Range: $118.23 – $210.86

5. Perficient (PRFT): $61.01

On July 27, 2023, Perficient announced that effective October 1, 2023, Thomas J. Hogan, the current President, will become the Chief Executive Officer.

MarketCap: $2.12BAvg. Daily Volume (30 days): 450,111Revenue (TTM): $922.73M
Net Income Margin (TTM): 11.12%ROE (TTM): 24.40%Net Debt: $362.5M
P/E: 21.34Forward P/E: 15.20EV/EBIDTA (TTM): 13.91
P/S (TTM): 2.43P/B (TTM): 4.4852 Week Range: $59.79 – $110.28

Departures

1.  Uber Technologies (UBER): $161.34

On August 1, 2023, UBER announced that Nelson Chai, Chief Financial Officer, will leave the company on January 5, 2024. The company is conducting a search for Mr. Chai’s replacement.

MarketCap: $95.04BAvg. Daily Volume (30 days): 24,764,350Revenue (TTM): $35.00B
Net Income Margin (TTM): -1.07%ROE (TTM): -4.22%Net Debt: $4.66B
P/E: -231.43Forward P/E: 107.53EV/EBIDTA (TTM): 251.73
P/S (TTM): 2.74P/B (TTM): 12.5752 Week Range: $22.94 – $49.49

2. Dell Technologies  (DELL): $52.95

On July 27, 2023, Dell Technologies announced Anthony Charles Whitten, Co-Chief Operating Officer, agreed that Mr. Whitten will resign from his position effective as of August 18, 2023

MarketCap: $38.51BAvg. Daily Volume (30 days): 3,892,055Revenue (TTM): $97.11B
Net Income Margin (TTM): 2.01%ROE (TTM): -73.16%Net Debt: $21.53B
P/E: 20.12Forward P/E: 9.79EV/EBIDTA (TTM): 7.32
P/S (TTM): 0.41P/B (TTM): N/A52 Week Range: $32.04 – $56.10

3. O`Reilly Automotive (ORLY): $918.46

On July 26, 2023, O`Reilly Automotive announced that Greg Johnson, the company’s Chief Executive Officer, informed the company’s Board of Directors of his intention to retire effective January 31, 2024.

MarketCap: $55.48BAvg. Daily Volume (30 days): 405,079Revenue (TTM): $15.22B
Net Income Margin (TTM): 14.84%ROE (TTM): -165.14%Net Debt: $7.06B
P/E: 25.50Forward P/E: 24.88EV/EBIDTA (TTM): 18.15
P/S (TTM): 3.83P/B (TTM): N/A52 Week Range: $680 – $975.72

4. PTC Inc (PTC): $143.75

On July 26, 2023, PTC announced that James Heppelmann who, as part of the Board of Directors’ CEO succession plan, will step down from his role as Chief Executive Officer effective February 14, 2024.

MarketCap: $17.08BAvg. Daily Volume (30 days): 715,062Revenue (TTM): $2.06B
Net Income Margin (TTM): 14.90%ROE (TTM): 12.90%Net Debt: $1.64B
P/E: 55.76Forward P/E: 28.09EV/EBIDTA (TTM): 32.81
P/S (TTM): 8.47P/B (TTM): 6.6752 Week Range: $101.82 – $152.09

5. Centerpoint Energy (CNP): $29.74

On July 21, 2023, Kara Gostenhofer Ryan informed CenterPoint Energy of her decision to resign from her position as Vice President and Chief Accounting Officer effective August 11, 2023, to pursue another career opportunity.

MarketCap: $18.77BAvg. Daily Volume (30 days): 4,060,702Revenue (TTM): $9.27B
Net Income Margin (TTM): 8.41%ROE (TTM): 7.64%Net Debt: $15.45B
P/E: 25.84Forward P/E: 19.76EV/EBIDTA (TTM): 13.02
P/S (TTM): 2.01P/B (TTM): 1.9452 Week Range: $24.55 – $32.86

If you are reading this article and have not signed up to receive such articles by email, please sign up either for our free, IA Plus or IA Premium service here. If you are an existing subscriber, you can login to the InsideArbitrage.com website to adjust the kinds of articles you receive by email by turning on or turning off specific categories of articles.