GameStop’s Frequent Reinventions May Give Retail Investors Whiplash
There’s a difference between a company changing because it is nimble, keeping up with the times…
…and a company that changes direction and strategy so often that it does not appear to know what it wants to be.
GameStop, the gaming retailer that seems intent on morphing into, well, anything, seems headed toward the latter group.
At this writing, on Friday (Jan. 7th), GameStop shares are roaring out of the gate, up double digit percentage points. The news driving the flurry of activity is that, among other things, as part of a turnaround plan, the retailer now is gunning to create a marketplace geared toward non-fungible tokens (NFTs).
As has been widely reported, the company is also aiming to strike partnerships with other firms, focused on cryptocurrency initiatives, as reported by The Wall Street Journal.
It's running farther and farther afield of video gaming, its core business.
The NFT initiatives are not coming entirely out of the blue.
As PYMNTS reported last week, the company put out a call — on its NFT website — for “all creators.”
Read Also: GameStop Looks for NFT Content Creators for Its Marketplace
The form also asks if the applicant has made any NFTs in the past or whether they have plans to make them — particularly in partnership with GameStop.
The GameStop NFT program has been in development for months, with job openings appearing as early as April 2021, along with another batch in October.
GameStop has so far hired over 20 people to run the division, which will buy, sell, and trade virtual video game merchandise like avatar clothing, accessories, and weapons.
See also: GameStop Shares Climb on News of Crypto, NFT Division
The push into NFT and crypto come as the company reported (as is common for tech focused, quickly-growing firms) widening net losses. As noted in this space last month, GameStop’s fiscal third quarter net loss was $105.4 million — an increase from the $18.8 million loss from 2020 at the same time — while its total revenue was at $1.30 billion.
Read Also: GameStop's Losses Widen as it Moves to eCommerce Retail
The journey away from meme-land is a critical one for GameStop, whose shares are up more than 600% in the last 52 weeks, per Yahoo Finance, yet, at a recent $146, is well off highs of $483. There’s still a significant short interest headed into Friday’s activity, at nearly 14% of the float, though it's quite possible at least some of that gets shaken out by the surge in Friday’s trading.
But here’s another point to consider: Roughly 18% of shares are held by insiders and another 30% by institutions, which of course implies that about half of the shares are held by retail investors. And it is the retail investor who is most exposed to the vagaries of Wall Street – where sentiment runs hot and cold, where the valuation game becomes a bit muddied when no one knows whether to value GameStop as a brick and mortar retailer or crypto upstart.
Volatility will likely be the only certainty as GameStop pursues its strategy, which in itself seems a bit…well, volatile.
Read Also: GameStop’s Post-Meme Transformation Takes Two Steps Forward