Why GameStop Is Soaring After-Hours Thursday
Stocks were generally lower again on Thursday, failing to maintain gains from earlier in the day. By the close, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down almost half a percent, with milder losses for the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC). Index Daily Percentage Change Daily Point Change Dow (0.47%) (171) S&P 500 (0.10%) (5) Nasdaq (0.13%) (19)
Data source: Yahoo! Finance.
Among the hardest-hit stocks over the past couple of months have been meme stocks, with GameStop (NYSE: GME) having lost nearly half its value since late November coming into Thursday's trading session. However, reports of a key strategic move from the video game retailer are reinvigorating its investor base and showing the company's willingness to be flexible and tap into promising trends.
That news sent the stock soaring more than 30% in after-hours trading Thursday night. It'll be interesting to see whether the strategy helps GameStop to regain the momentum its stock had in early 2021.
GameStop plays the crypto card (again)
GameStop is reportedly looking to launch a business segment that will seek to build partnerships with key players in the cryptocurrency industry, according to The Wall Street Journal. The move would likely include the development of a marketplace for nonfungible tokens (NFTs), which have been extremely popular lately and generated considerable buzz among crypto fans.
GameStop already has a website designed for NFTs, and it includes resources allowing prospective creators to list their NFTs on GameStop's marketplace when it becomes available. With the slogan "change the game," the company hopes to make players, creators, and collectors all part of its ecosystem in an effort to build brand awareness and promote the marketplace over time.
Image source: Getty Images.
NFTs arguably have heightened relevance to video game players. Modern games already involve virtual realities in which in-game assets are often bought and sold for substantial amounts of real money. Introducing the concept of collectibles and other status items is a natural evolution of the virtual-reality construct. With companies like Meta Platforms affirming the long-term potential of the metaverse, a similar move from GameStop seems like a reasonable idea.
Old news?
Given GameStop's past hints of moving in this direction, it's unclear how much of the report is truly news to investors who've actually been watching the company closely. Confirmation of hiring a team of developers and publishers is a step forward, but skeptics will wonder if it's a step that's worth a $40 per-share bump in the stock price.
More broadly, the NFT universe itself sharply divides investors. Some see it as a revolutionary new asset class that allows creators to get more direct access to the collectibles market, keeping more of the proceeds of sales for themselves and easing distribution. Others see the immense prices some are paying for NFTs as evidence of an inflating asset bubble that could lure in unsuspecting investors at exactly the wrong time.
Of course, that debate isn't all that different from the one GameStop shareholders have been engaged in for more than a year now. The video game retailer's stock has definitely been volatile, but those who've expected the share price to return to the depressed levels at which it traded before the meme-stock revolution took off have been dead wrong so far.
The market has been turbulent enough that GameStop's aftermarket gains could well evaporate quickly. But we've also seen even bigger moves in the past. Regardless of what happens with the stock, it'll be interesting to see whether GameStop emerges as a key player in the budding NFT market.
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