GameStop slips after CEO resigns only months after taking top post
Shares of GameStop (GME) were trading lower after its chief executive officer resigned from the position for personal reasons, effective immediately. WHAT'S NEW: Before the market open, GameStop announced the resignation of CEO Michael Mauler for personal reasons and said that the board had appointed Daniel DeMatteo as interim CEO. DeMatteo, one of the game retailer's co-founders, will continue to serve as executive chairman and director. In a regulatory filing, GameStop said that Mauler's resignation was not due to any disagreement with the company regarding its "financial reporting, policies or practices or any potential fraud relating thereto." WHAT'S NOTABLE: The move from the game retailer is the latest in a saga of upper management shifts. On February 6, GameStop announced Michael Mauler's appointment as CEO of the company after J. Paul Raines resigned from his position for health reasons. Later that week, GameStop disclosed in a regulatory filing that it had terminated the employment of chief operating officer Tony D. Bartel and executive vice president of strategic business and brand development Michael P. Hogan. LOOP KEEPS HOLD: Following the CEO news, Loop Capital analyst Anthony Chukumba maintained a Hold rating on GameStop, saying he was "very surprised" by Mauler's resignation, especially since had been in the position for just over three months and the company previously "cleaned house" when he was installed at the top. Chukumba said that management turmoil is the last thing the retailer needs as it attempts to manage through the headwind of growing full game downloads in its core video game business and renegotiating more favorable terms from AT&T (T) in its struggling postpaid wireless retailing business. Still, the analyst said the Hold rating remains appropriate based on the "almost unheard of" 1.9x enterprise value/EBITDA multiple at which the stock now trades. BAIRD KEEPS OUTPERFORM: In addition, Baird analyst Colin Sebastian reaffirmed an Outperform rating and $18 price target on GameStop, saying he does not believe the CEO change will impact the company's strategic direction. Sebastian also noted that another CEO transition could push GameStop's board to review or consider strategic alternatives, in particular with shares not reflecting much confidence in the current operations. PRICE ACTION: In late morning trading, GameStop shares fell about 1.9% to $12.80.