December 8, 2022

the main points

  • GameStop hasn’t given much detail on how it plans to survive in the digital future of gaming
  • Instead, it’s a big bet on risky NFTs, and their market is imploding internally

Jim Stop‘s (GME -2.47%) The current turnaround strategy is still somewhat of a mystery to investors, but what we saw was primarily focused on non-fungible tokens, or NFTs, which are digital ledger technology that grants ownership or use of a digital asset.

In May, the video game retail store was launched GameStop Walletself-guard Ethereum The wallet that is user controlled and accessible without leaving their browser, then in July NFT . Market Where tokens can be bought and sold.

It remains a mystery how GameStop will survive, let alone thrive, in the video game industry that is increasingly moving to digital and home gaming. But Chairman Ryan Cohen seems to think it involves riding modern cryptocurrency and NFT Markets.

Unfortunately, it also appears that the idea of ​​NFT may be a failure, and it puts the future of GameStop in doubt.

crumbling cipher

Cryptocurrency and NFT are in free fall. BitcoinThe largest cryptocurrency by market capitalization collapsed by 60% in 2022 to reach $19,000, while the second largest cryptocurrency, Ethereum, fell by 64%. Volumes in the NFT markets are also collapsing, with Opensea, the most popular market, seeing 90% of its volume evaporate through August.

The GameStop market is no better off during this encryption winter. The platform got off to a fast start in its first week in business, making less than $2 million in first-day transactions, and seeing the top 50 total of over $7.5 million in transactions in its first week. But this was as good as it got.

GameStop Corp.
motley ful

Based on GameStop’s 2.25% transaction fee, GameStop NFT enjoyed an income of approximately $44,500 on sales of $1.98 million on its first day of operation. However, Cointelegraph reports that NFT fell to just over $3,750 in daily revenue of $167,000 by the end of August, and has fallen further since then. Data from Dappradar shows that over the past 24 hours, volume has fallen to $85,000, which equates to fee income of just $1,912 per day. Average pricing is also down, down 22% over the past month.

If GameStop is hoping that NFTs will provide some ground for it to figure out what to do with the video game retail business, it appears to be falling apart.

Decreased role of NFTs in games

NFTs are generally declining, and even in GameStop’s core business, game companies are suddenly falling back on their technology adoption.

Bloomberg He points out that studios first delved into NFTs at the height of their popularity, believing that tokens could provide a way for players to own their in-game digital rewards earned or purchased while providing themselves with a new revenue stream. But now they are running away from it.

Maine Craft Developer Mojang has banned companies from creating NFTs for his game and refuses to allow building on Minecraft worlds blockchain networksreverse previous decisions to explore its potential. Ubisoftthe creator of some very famous titles like Ghost Recon And the Doctrine killeralso backed down from pursuing the in-game NFT market.

Bloomberg says so after Take-Two Interactive. interactive Zynga bought into its blockchain capabilities, and has avoided closely discussing it in every quarterly earnings conference call since then.

If game companies want little to do with NFTs and cryptocurrencies, how will video game retailer GameStop make them a viable part of their own business?

Sand based foundation

All of this does not bode well for the retailer’s future. GameStop only survived this far because it wisely made use of its features stock meme She collected a lot of money to pay off her debts. So even though she’s constantly losing money at the moment ($267 million last quarter), she’s not about to deplete her bank account anytime soon (she still has nearly $1 billion in cash and the like).

Despite this, GameStop needs to come up with a realistic view of how its business will grow. The NFT and crypto markets have always been risky ventures to build recovery on. Now that’s even gaming companies Backing them off, investors can better see that it’s best to stay away from GameStop stock until it brings a viable plan to the table.

This article Originally appeared In Motley Bean.

Rich Dupre He has no position in any of the mentioned shares. Motley Fool has positions in and recommends Bitcoin, Ethereum, and Take-Two Interactive. The Motley Fool recommends Ubisoft Entertainment and recommends the following options: January 2023 Long Calls $115 on Take-Two Interactive. Motley Fool has a profile Disclosure Policy.

A GameStop logo and trading information screen is displayed on the floor of the New York Stock Exchange (NYSE) in New York City, United States, March 29, 2022.
A GameStop logo and trading information screen is displayed on the floor of the New York Stock Exchange (NYSE) in New York City, United States, March 29, 2022.
REUTERS/Brendan Madermaid

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