Is GameStop’s Big Bet on NFTs Going Bust?
- GameStop didn’t offer many details on how it plans to survive in gaming’s digital future
- Instead, it’s betting on risky NFTs whose markets are collapsing
game stationof (GME -2.47%) The current turnaround strategy is still fairly opaque to investors, but what we’re seeing is largely focused on non-fungible tokens or NFTs, a digital classification that gives ownership or use of digital assets accounting technology.
In May, the video game retailer launched GameStop Walletself-insurance Ethereum User-controlled wallet that can be accessed without leaving the browser, followed in July NFT market A place where tokens can be bought and sold.
How GameStop will survive, let alone thrive, in a video game industry that is increasingly transitioning to digital and downloadable games remains a mystery.But chairman Ryan Cohen seems to think that includes using popular cryptocurrencies and NFT market.
Unfortunately, it looks like the NFT idea could fail, putting GameStop’s own future in question.
Cryptocurrencies and NFTs are in free fall. bitcoinThe largest cryptocurrency by market cap is down 60% in 2022 to $19,000, while the second-largest cryptocurrency, Ethereum, is down 64%. Trading volumes in the NFT market are also collapsing, with the most popular market, Opensea, losing 90% of its volume in August.
GameStop’s market performance did not improve during this period Crypto Winter. The platform got off to a flying start in the first week of business, with less than $2 million in first-day transactions and over $7.5 million in first-week transactions for the top 50 collectibles. But it’s as good as it gets.
Based on GameStop’s 2.25% transaction fee, GameStop NFT earned about $44,500 on its first day of operation, with sales of $1.98 million. However, Cointelegraph reported that daily NFT revenue fell to just over $3,750 by the end of August with a trading volume of $167,000, before plummeting further. Data from Dappradar shows that in the past 24 hours, transaction volume fell to $85,000, which equates to just $1,912 in fee income per day. Average prices are also falling, down 22% over the past month.
If GameStop wants NFTs to give it some bottom line until it figures out what to do with its video game retail business, it appears to be falling apart.
The role of NFTs in gaming is diminishing
NFTs have generally fallen out of favor, and even in GameStop’s main business, gaming companies have suddenly abandoned their embrace of the technology.
Bloomberg Noting that studios jumped into NFTs at the height of their popularity, they believe these tokens could provide a way for gamers to own digital bounties they’ve won or purchased in-game, while providing themselves with a new source of income. But now they are running away from it.
my world Developer Mojang has banned the company from creating NFTs for its games and refused permission to build Minecraft worlds blockchain networkreverse previous decisions to explore its potential. UbisoftCreators of some extremely popular games such as Ghost Recon and Assassin’s Creedand also gave up the pursuit of the in-game NFT market.
Bloomberg said that after two people interact Zynga was acquired because of its blockchain potential, and since then it has deliberately avoided discussing it on every quarterly earnings call.
If gaming companies don’t want to deal with NFTs and cryptocurrencies, how will video game retailer GameStop make it a viable part of its own business?
foundation built on sand
None of this bodes well for the retailer’s future. GameStop has survived to this day because it used wisely meme stock And raised a lot of money to pay down the debt. So while it’s been losing money right now ($267 million last quarter), it won’t be draining its bank account anytime soon (it still has nearly $1 billion in cash and equivalents).
Still, GameStop needs to come up with a realistic vision for how it will grow its business. NFT markets and cryptocurrencies are always venture capital investments that build a recovery.even now game company Moving away from them, investors can get a better look at stocks that are best kept away from GameStop until it comes up with a viable plan.
This article appeared first In “Motley Fools”.
rich dupre No positions in any of the above stocks. The Motley Fool owns and recommends Bitcoin, Ethereum and Take-Two Interactive. The Motley Fool recommends Ubisoft Entertainment and recommends the following options: January 2023 $115 long-term call option Take-Two Interactive.variegated fools have one Disclosure Policy.