GameStop (NYSE:GME) stock is trending today on news that the video game retailer has launched its own non-fungible token (NFT) marketplace.
In a news release, GameStop said that its new NFT platform is now open to the public for beta testing. Users can connect to their own digital wallet, or use the recently launched “GameStop Wallet” to buy, sell and trade NFTs on the new platform. GME stock is up about 1% today on news that the NFT marketplace has officially opened to the public.
Year-to-date, GME stock has declined 15% to trade at $130.09 per share.
What Happened
GameStop said the new NFT marketplace will help to diversify its business and enable the bricks-and-mortar retailer to capitalize on the popularity of cryptocurrencies and blockchain technologies. However, some analysts are questioning the timing of the NFT marketplace, coming as it does amid a crash in prices for cryptocurrencies and diminished demand for digital products.
The NFT marketplace’s launch is part of GameStop’s efforts to turnaround its business after years of declining sales and poor financial results. In the three-months ended April 30, the company reported a net loss of $157.9 million on revenues of $1.38 billion. A year earlier, GameStop reported a $66 million net loss on $1.27 billion in revenue.
GameStop is also known as the “original meme stock,” and its shares have been caught in a short squeeze on several occasions over the past 18 months, sending them up to unsustainable levels before they come crashing back to earth.
Why It Matters
In its news release, GameStop said that the NFT marketplace will eventually be expanded to also offer other features such as Web3 gaming. The company’s digital strategy is aimed at winning over skeptical investors who have written off GameStop as an outdated legacy retailer. GameStop operates a total of 4,573 retail stores, including 3,018 in the U.S. The company also owns the EB Games and Micromania retail brands.
GameStop has been hurt in recent years by the videogame industry’s shift online and away from buying games at physical retail stores. Some analysts are criticizing the new NFT marketplace, saying it arrives just as sales of digital artwork and avatars are cooling off from their pandemic peak. GameStop must also compete with established NFT marketplace competitors, such as industry leader OpenSea.
What’s Next for GME Stock and the GameStop NFT Marketplace
GameStop’s new NFT marketplace is generating some buzz among retail investors. However, the launch of the digital platform is not pushing GME stock up significantly, an indication of the downturn in the cryptocurrency and NFT markets. Going forward, GameStop will need to prove that it can make a success of the NFT platform and its overall digital turnaround strategy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
