Thu. Jan 27th, 2022

Shares of GameStop skyrocketed on news that the firm is launching a non-fungible token (NFT) market.

It was only a matter of time before the turbo-charged worlds of meme stocks and crypto-trading collided in a burst of speculative madness.

News late Thursday that GameStop Corp., which has become the hallmark of 2021’s turbulent year of retail investment, is entering the business of non-fungal tokens, the stock rose more than 20% after hours before hitting a returned some land. Shares rose about 6% to $ 138.50 by 10:45 a.m. Friday in New York. The jump followed a sharp pullback since late November.

NFTs emerged last year as the hottest commodity of the crypto universe, as prices for some digital artworks skyrocketed 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 AMC Entertainment Holdings Inc., which announced in November that it was considering issuing its own crypto-currency.

Entering the NFT trade would be the latest pivot for Chairman Ryan Cohen, whose attempt to rediscover the brick-and-mortar video game vendor in a digital first retailer caused a stir for the stock last year , which caused huge losses for hedge funds that were short the shares.

Chart showing the rise in GameStop share price after announcing plans to create an NFT market

“The market is crazy about the decision, the struggling company has been buying for some time by hanging NFTs in front of investors,” said Tokyo-based gaming industry analyst Serkan Toto. “However, I am very skeptical whether GameStop can make it on its own. The company definitely needs partners to compete with people like OpenSea and get video game companies to work with. ”

GameStop’s NFT strategy, first reported by the Wall Street Journal, involves discussions with crypto and blockchain operators about which tokens will be accepted in its market, as well as setting up potential funds, each of up to $ 100 million, to to invest in NFT content creators. and game studios.

The largest market for NFTs, OpenSea, was valued at $ 13.3 billion in its latest fundraising round this week. It exploded in sales last year, with a 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% reduction on every transaction.

Following the success of OpenSea, a number of other NFT marketplaces have emerged in recent months in the hope of attracting users. GameStop already has a stable of millions of loyal gamer fans who can lead it to its own market.

The stock-strengthening power of crypto was seen earlier this week when Square Enix Holdings Co. shares rose 7.5% after its president’s New Year’s letter outlined plans to develop metaverse, blockchain and NFT-based incentives for players. It also illustrated the contrast between the market and public reaction, as the developer, whose titles include the iconic Final Fantasy franchise, was decisive by players and industry observers for its monetization efforts.

(Update shares.)

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