To continue benefiting from the hype that led to a surge in GameStop’s share prices, the company seems to adopt a new business strategy by involving in the NFT & Cryptocurrency space.
Over the last six weeks, GameStop shares have dropped by more than 45 percent, yet the stock is still much above where it was when investors began rushing into the stock a year ago.
GameStop joins a growing number of firms attempting to profit from the emerging crypto and NFT industry. The company will face competition from some of the existing players already dominating the market, as a few NFT marketplaces are already vying for market domination, some of which include tokens from game producers.
OpenSea, a leading NFT marketplace, announced earlier this week that it had collected $300 million in venture capital and is now valued at $13.3 billion, which is higher than GameStop's valuation of around $10 billion.
According to people familiar with the firm's plans, GameStop is forming a division to develop a marketplace for nonfungible tokens and form cryptocurrency partnerships, propelling the company into much-hyped sectors as it works to turn around its core videogame business.
The firm has employed around 20 people to oversee the operation, which is developing an online hub for buying, selling, and exchanging NFTs of virtual videogame products including avatar clothing and weaponry. The company seems to be inviting a few game developers and publishers to put NFTs on its marketplace when it goes live later this year.
According to the sources, GameStop is also close to signing deals with two crypto startups to exchange technology and co-invest in the creation of blockchain and NFT-based games, as well as other NFT-related initiatives. The store plans to get into similar deals with a dozen or more crypto startups this year and invest tens of millions of dollars in them.
After years of losses, GameStop has been working to relaunch its business. Last year, the company was at the focus of a stock-trading frenzy that raised its share price, riding a wave of enthusiasm and optimism from individual investors.
GameStop's financial performance has yet to show major improvements as a result of the turnaround effort. Revenues increased in the quarter ending in October, but the company's deficit expanded compared to the same time a year ago. Hardware and accessory sales grew by 2 percent, but revenue from gaming software fell by 2 percent.
On an earnings call with analysts this month, GameStop Chief Executive Matt Furlong remarked, "We believe our focus on the long term is placing us to grow what will ultimately become a much larger organization." Mr. Furlong, who joined GameStop from Amazon.com Inc. last year, then said that the company was looking into blockchain and NFT technology for commercial prospects.