Tech
Meme stocks meet cryptocurrency craze with GameStop pursuing NFTs
It was only a matter of time before the turbulent worlds of meme and cryptocurrency trading collided in an explosion of speculative frenzy. News late Thursday that GameStop Corp., which has become emblematic of 2021’s turbulent retail investing year, is getting into the non-fungible token business sent shares soaring after hours, and shares rose about 20% in trading premarket in the US on Friday. The jump followed a sharp retreat since late November.
NFTs emerged as the crypto universe’s hottest commodity last year as prices for some digital artworks soared into the millions of dollars and celebrities and athletes flocked to the asset class. GameStop’s flirtation with cryptocurrencies follows that of fellow Redditor AMC Entertainment Holdings Inc., which announced in November that it is considering issuing its own cryptocurrency.
Entering the NFT market would mark the latest twist for Chairman Ryan Cohen, whose push to reinvent the physical video game seller into a digital retailer sparked a fervor for the stock last year, triggering big losses for hedge funds that were short Actions.
GameStop soars to NFT market floor as Cohen Maps circles
“The market welcomes this decision, the struggling company bought time by waving NFTs in front of investors,” said Serkan Toto, a Tokyo-based gaming industry analyst. “However, I am very skeptical that GameStop can do it on its own. The company definitely needs partners to compete with the likes of OpenSea and convince video game companies to collaborate.”
GameStop’s NFT strategy, first reported by the Wall Street Journal, involves talks with cryptocurrency and blockchain operators about which tokens would be accepted on its marketplace, as well as the creation of potential funds, each up to $100 million, to invest in NFT content creators and game studios.
The largest marketplace for NFTs, OpenSea, was valued at $13.3 billion this week in its latest fundraising round. Last year saw an explosion in sales, with monthly volume peaking at $3.4 billion in August, up from $96.7 million in February, according to Dune Analytics. The company makes money by taking a 2.5% cut on every transaction.
Following the success of OpenSea, numerous other NFT marketplaces have sprung up in recent months, hoping to attract users. GameStop already has a stable of millions of loyal gamer fans that it can direct into its marketplace.
The stock-boosting power of cryptocurrencies was on display earlier this week, when shares of Square Enix Holdings Co. jumped 7.5% after its president’s New Year’s letter laid out plans to develop metaverse, blockchain, and NFT-based incentives for players. This also illustrated the contrast between market and public reaction as the developer, whose titles include the iconic Final Fantasy franchise, has been roundly criticized by gamers and industry observers for its monetization efforts.