GameStop shares soaring once again after emergence of NFT and crypto market plans

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Top line

GameStop shares soared in after-hours trading on Thursday after a report exposed some of the company’s plans to create a division to buy, sell and trade digital collectibles known as non-fungible tokens, reversing recent losses for last year’s hit meme stock as the physical game seller doubles the cryptocurrency space to help a turnaround.

GameStop action jumped more than 30% in after-hours trading on Thursday.

SOPA Images / LightRocket via Getty Images Highlights

Grapevine, Texas-based GameStop has hired more than 20 people to help build an online marketplace to trade virtual game NFTs, a source familiar with the matter confirmed to Forbes after The Wall Street Journal announced the plans. for the first time on Thursday.

GameStop shares climbed more than 31% to $ 173 in aftermarket trading minutes after the report, the highest levels in nearly a month after the stock fell victim to a large sell-off. triggered by the Federal Reserve on Wednesday.

The company also plans to partner with game developers and publishers to list NFTs, from avatar outfits to weapons, on its platform.

GameStop, which raised over $ 1 billion from investors last year, has already previewed the move, launching a GameStop NFT page on its website in May and a link to an Ethereum address (the platform blockchain behind many NFTs), but giving no additional details, rather promising to “change the game”.

Shares of GameStop have climbed about 860% in the past year, valuing the company at more than $ 13 billion despite falling about 65% from an all-time high in January.

Key context

Back in January, Reddit traders declared GameStop their stock of choice as they bought the most heavily shorted companies on Wall Street. GameStop has been one of the hardest hit retailers over the past decade, as independent companies like Minecraft gobbled up market share, but its shares started to rise at the end of 2019, when the investor of 36-year-old Ryan Cohen started buying stocks at around $ 6 and lambasted management for “lacking[ing] the mindset, resources and plan needed to [help GameStop] become a dominant player in the sector. Cohen was appointed chairman of the company in April, but has so far been fairly silent on his turnaround plans. Last month, the company reported third-quarter revenue of $ 1.3 billion, about 30% more than the same period. a year ago, but a larger than expected loss of $ 105 million.

Tangent

After skyrocketing over 800% last January, then plunging to 70%, GameStop and other memes stocks have continued to attract retail investors massively, despite bouts of intense volatility. “The retail force behind this move is still strong, so anyone can guess how much it can grow,” Oanda senior analyst Ed Moya wrote in a recent note. The GameStop share price is more than double the average one-year price target among Wall Street analysts of $ 83.

Surprising fact

NFT transaction volume totaled over $ 23 billion last year, reflecting a staggering increase from less than $ 100 million in 2020.

Further reading

GameStop Enters NFT and Cryptocurrency Markets Under Recovery Plan (WSJ)

GameStop Raises $ 1.1 Billion – Cashing 1,200% Increase Fueled by Reddit and Sending Shares Soaring Again (Forbes)

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