- GameStop said Chief Executive Officer George Sherman will step down by July 31.
- The board is leading a search to identify CEO candidates who can accelerate the next phase of the company's transformation.
- Some investors also took comfort in Keith Gill's move to double down on his GameStop bet, forgoing millions of dollars in quick profit from an options trade.
GameStop rallied Monday after the video game retailer announced its CEO succession plan as it tries to pivot to e-commerce following a historic short squeeze.
Shares of GameStop jumped more than 6% to close at $164.37.
The company said CEO George Sherman will step down by July 31. It said the board is leading a search to identify CEO candidates who can accelerate the next phase of the company's transformation.
While GameStop shares are well below the record highs of $483 reached in January, the stock is still up a whopping 770% for 2021. To take advantage of the massive Reddit-fueled rally, GameStop announced a $1 billion stock sale earlier this month. It plans to use the sale's proceeds to aid its transition into e-commerce, which is led by activist investor and Chewy co-founder Ryan Cohen.
The company also hired former Amazon and Google executive Jenna Owens as its new chief operating officer.
"GameStop's next CEO and CFO are likely to come from the tech industry, as with the other recent senior hires, and would require a wide range of strategic and operational experience, given GameStop's complex business model, including ~4,800 global stores, digital, used games, new software and hardware, and collectibles," Telsey Advisory Group analyst Joseph Feldman wrote in a note.
Some investors also took comfort in Keith Gill doubling down on his GameStop bet. On Friday, he decided to forgo millions of dollars in quick profit from an options trade. Gill is perhaps the biggest influencer in the Reddit retail trading crowd.
The investor — who goes by DeepF------Value on Reddit and Roaring Kitty on YouTube — exercised his 500 GameStop call options contracts as they expired on Friday, giving him 50,000 more shares at a strike price of just $12. Gill could could have made more than $7 million on the bet if he had sold the options at Friday's price.
Gill also bought 50,000 more GameStop shares, bringing his total investment to 200,000 shares worth more than $30 million.
Gill's trading information is based on his Reddit posts, which appear to be snapshots of his investment account. The posts were not independently verified by CNBC.
Still, Wall Street analysts' consensus is that GameStop's stock price is significantly detached from fundamentals. Tesley maintained its underperform rating and 12-month price target of just $30 per share.
"We continue to believe the current valuation far exceeds our rosy fundamental expectations and projected multi-year benefits from the strategic transformation," Feldman said.
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