GameStop is going big on cryptos and investors are all for it. The video game retailer is planning to create a marketplace for nonfungible tokens and develop a cryptocurrency business. The mere mention of crypto in the same breath as the original meme stock triggered trading frenzy. The stock surged by as much as 17 per cent before retreating sharply.
GameStop is not the only company looking to take advantage of the stock-boosting power of crypto association. Cinema chain AMC Entertainment, another meme stock favourite, has started accepting crypto payments and issued its own NFTs last year.
For critics, NFTs mainly betoken the top of an asset bubble that has already begun to deflate. Demand for the tokens — which use technology that allows proof of ownership of digital goods to be stored on a blockchain — has exploded over the past 12 months. Transaction value topped $23bn in 2021, according to one estimate. OpenSea, a leading NFT marketplace, was last valued at $13.3bn following investment of $300m.
Gamers — who are already spending a lot on virtual goods and collectibles — are a rapidly growing segment of the NFT market. It makes sense for GameStop, which has cashed in on its meme-stock fame to repair its balance sheet, to try to create its own marketplace. It would also be in line with chair Ryan Cohen’s push to transform the brick-and-mortar retailer into an online hub for ecommerce, esports and online gaming.
None of this should distract from GameStop’s sales woes. Shares in GameStop have almost halved since November. Just as the rise of online gaming has made visits to GameStop physical stores obsolete, the challenge will be to get gamers to spend their money on its future NFT platform. But gaming giants such as Nintendo, Xbox and PlayStation all have their own ecommerce sites. Gamers are already used to buying virtual goods directly from gaming platforms such as Minecraft, Roblox and Fortnite too. GameStop, as a favourite of meme traders, is cannily preaching to the converted with its plan to move into crytpos and NFTs.
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