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A logo on a GameStop store in Frankfurt, Germany. Picture: BLOOMBERG/ALEX KRAUS
A logo on a GameStop store in Frankfurt, Germany. Picture: BLOOMBERG/ALEX KRAUS

It was just a matter of time before the turbocharged worlds of meme stock and crypto trading collided in a burst of speculative frenzy.

News that GameStop, which became emblematic of 2021’s turbulent year of retail investing, is getting into the business of non-fungible tokens (NFTs) sent the stock soaring about 30% in extended trading. The jump followed a sharp retreat since late November. 

NFTs emerged as the hottest commodity of the crypto universe last year as prices for some digital artworks spiralled into the millions of dollars and celebrities and athletes flocked to the asset class. GameStop’s flirtation with crypto follows that of fellow Reddit crowd darling AMC Entertainment Holdings, which announced in November that it’s contemplating issuing its own cryptocurrency.

Getting into the NFT trade would mark the latest pivot for chair Ryan Cohen, whose push to reinvent the brick-and-mortar video games seller into a digital-first retailer sparked a fervour for the stock last year, triggering large losses for hedge funds that were short the shares.

“The market loves the decision. The struggling company has bought some time by dangling NFTs in front of investors,” said Tokyo-based games industry analyst Serkan Toto.

“However, I am very sceptical if GameStop can make it on its own. The company definitely needs partners to compete with the likes of OpenSea and get video game companies to co-operate.”

Getting into the NFT trade would mark the latest push to reinvent the brick-and-mortar seller of video games. Graphic: BLOOMBERG
Getting into the NFT trade would mark the latest push to reinvent the brick-and-mortar seller of video games. Graphic: BLOOMBERG

GameStop’s NFT strategy, first reported by the Wall Street Journal, involves talks with crypto and blockchain operators about what tokens would be accepted on its marketplace as well as setting up potential funds, each of up to $100m, to invest in NFT content creators and game studios.

The largest market for NFTs, OpenSea, was valued at $13.3bn this week in its latest fundraising round. It saw an explosion in sales last year, with monthly volume peaking at $3.4bn in August, up from $96.7m in February, according to Dune Analytics. The company makes money by taking a 2.5% cut of every transaction.

After OpenSea’s success, a slew of other NFT marketplaces have sprung up in recent months, hoping to attract users. GameStop already has a stable of millions of loyal gamer fans whom it can direct into its own marketplace.

The stock-boosting power of crypto was on display earlier this week when Square Enix Holdings shares jumped 7.5% after its president’s letter for the new year set out plans to develop metaverse, blockchain and NFT-based incentives for players.

That also illustrated the contrast between the market and public reaction as the developer, whose titles include the iconic Final Fantasy franchise, was roundly lambasted by gamers and industry observers for its monetisation efforts.

Bloomberg News. More stories like this are available on bloomberg.com

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