Personnel at GameStop are being given the termination papers as new managers and field employees are being hired, an internal memo and an insider familiar with the subject revealed Friday.
Following a 15% increase during Thursday's trading session in response to the news of a 4-for-1 stock split that will go into effect on July 22, GameStop shares dropped as much as 10% after the market closed.
Gamestop CEO Matt Furlong noted in an organizational message that "Change will be a constant as we expand our commerce business and provide new products via our blockchain division."
Furlong also pointed out that in the previous 18 months, the company has made substantial investments in personnel, technology, inventory, and supply chain infrastructure, and "now, our focus is on generating continuous profitability."
Uncertainty surrounds the extent of layoffs, according to a source with knowledge of the situation.
Employees of GameStop were informed verbally during many live meetings that there will be a 25% reduction in workforce; however, this number may only represent corporate workers and not store employees.
In the memo to staff, Furlong detailed the changes and stated that the company must take big measures as it invests in its digital future.
The changes, according to the CEO, requires cutting unnecessary expenses and operating with an intense owner's mentality, as "everyone in the organization must become even more hands-on and accept greater responsibilities for results."
After increasing more than 15% during the regular session, the company's stock declined more than 6% during extended trading.
The memo claimed, "After making over 600 corporate hires in 2021 and the first half of 2022,... we're making a series of cutbacks to help us keep things simple and function quickly with the right personnel."
GameStop said it will make a substantial investment in store leaders and field staff, and the firm will provide specifics about this commitment in the coming weeks.
Additionally, the company said that GameStop Chief Financial Officer Mike Recupero, who has held the post for more than a year, will be succeeded by Chief Accounting Officer Diana Jajeh.
The stock split will not affect the value of GME's existing stockholders, despite the fact that the number of shares would triple.
Such a split can be utilized by corporations to make their shares more accessible to smaller investors, resulting in increased demand and enhanced liquidity.
