does Gamestop have a cheat code up its sleeve?
as you have no doubt gathered by now, either from your own investments or the pain-filled posts from your investor-friends on social media, global markets appear to have taken a bearish turn for good. in such times when even tech giants such as Tesla and Netflix are haemorrhaging, one might think ‘meme stocks’ that made it big during pandemic times are set to be wiped off the face of Earth. while that might well end up being the case for some, one in particular is doing its best to stave off that threat with an interesting pivot.
Gamestop, the brick and mortar video game store, is making preparations to launch an NFT marketplace. when this news broke on January 7, its stock surged as much as 20%, albeit that was before the market collapse began. can this switch stave off its anticipated doom?
while on the face of it, NFTs appear to be mere collectors’ items or speculative zero-sum games with big winners and losers, there’s much more to them than meets the eye. the largest of them, Opensea, which is based on the Ethereum blockchain, recently garnered a $13.3 billion valuation with its latest funding round of $300 million. in the 30 days preceding this announcement, Opensea saw $2.91 billion worth of NFTs traded on its platform. extrapolating that data to twelve months and applying its 2.5% transaction fees, its annual revenue was pegged at around $873 million.
despite that being an impressive number, comparing that figure to Gamestop’s $5.09 billion revenue for 2021 adds some much needed context to the implications of the pivot. in order to have a significant impact, not only would Gamestop have to launch and become the top NFT marketplace but it would also have to better Opensea’s numbers by a multiplier of 2x to match its 2020 revenue of $6.46 billion or 4x to match its 2019 revenue of $8.48 billion. this, assuming that it manages to maintain that $5 billion figure in 2022, despite having slipped in successive years as mentioned.
furthermore, Gamestop has shown little interest in cleaning up its business model and appears to be more interested in shooting off speculative gambles in the hopes that one of them will make it all worthwhile. the NFT move is perhaps in the hopes that it can capitalise on the overlapping interests of its ‘Wall street bets’-like communities of investors.