Two of 2021’s strangest trends are coming together Thursday evening as GameStop’s stock surges on a report that it is working to establish an NFT and cryptocurrency marketplace alongside partner game developers and publishers.
The news, first reported by The Wall Street Journal, suggests GameStop has a 20-person unit working on the online marketplace, set to launch later this year, which will offer in-game goods as supply-limited, cryptographically signed NFTs. In addition, the Journal’s sources suggest GameStop may be preparing to invest “tens of millions of dollars” in crypto-related companies, including the development of games that use the blockchain.
Shares of GameStop stock, which today closed at its lowest point since last March after a six-week slide, were up sharply in after-hours trading immediately following the report. As of this writing, the stock’s value had increased over 30 percent in a little more than an hour after the market closed, bringing to mind images of the “meme stock” rallies of last January.
This isn’t the first sign of GameStop’s intent to get in on the NFT bandwagon. The company launched a bare-bones website for “GameStop NFT” back in May, seeking “exceptional engineers (solidity, react, python), designers, gamers, marketers, and community leaders” for its team. Those vague plans have also been mentioned on recent earnings calls from the company as well. But the Journal report is the strongest sign yet of GameStop’s near-term plans to become a central clearinghouse for in-game NFTs for the wider industry rather than just another purveyor of branded digital collectibles.
Hooking on to the current mania for NFTs could provide a much-needed change-of-subject for GameStop, which continues to post widening losses despite the resilience of its stock price. Signs of a tech-driven pivot presaged by new chairman Ryan Cohen have yet to show much in the way of actual changes at the company, which still relies heavily on brick-and-mortar sales of new and used physical video games for the bulk of its business.
But investing millions in the new space also comes with risk. While massive valuations for NFT-based virtual land and play-to-earn games like Axie Infinity are drawing plenty of attention, there are also signs that the growth might not be sustainable if and when the wave of new player-investors slows. Some see NFTs as a still-inflating bubble that is destined to bring in more short-term money than long-term value to publishers and gamers.
Then again, GameStop stock was still up roughly 640 percent year-over-year even before this evening’s price surge. So who’s to say what even defines “value” for investors anymore?
Listing image by Getty Images