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Should I Buy GameStop Stock As It Invests in NFTs?

Just when you thought that the GameStop saga couldn’t get any weirder, it goes and confirms that it’s working on an NFT platform.

Five months on from its infamous short-squeeze in January, GameStop (NASDAQ: GME) isn’t going away. 

In fact, the ‘gaming’ company is doubling down and just embracing its newfound meme-stock status, it seems. 

“But should I buy GameStop?”

Not touching that one with a ten-foot pole, but I can explain just why GameStop is at the top of headlines once more today. 

You all know what NFTs are by now, right? Non-fungible tokens, or digital assets that represent real-world objects like art, music, in-game items, and videos.

Anyway, GameStop tried (and failed) to very subtly confirm on Tuesday that it was getting into the NFT business. The gaming retailer is building a team of engineers, designers, gamers, marketers, and community leaders to help build an NFT marketplace based on the Ethereum blockchain platform. Ethereum is the world’s second-largest crypto asset. 

While it might seem crazy that what is essentially a retail store is now delving into the vastly misunderstood digital assets space, GameStop does have some business being here. 

GameStop actually has a relatively successful collectibles business, selling all manner of sought-after physical items, from trading cards to Pop! figurines. In 2020, the company recorded almost $600 million in collectibles revenue, up 11.4% on the year before. With collectibles and NFTs currently trending, it is a ‘somewhat’ logical move, and one that GameStop can afford, having eliminated all of its long-term debt as of May 3. 

It is still early days yet, but if GameStop can get past:

  • its 12 million± shortsellers;
  • its lack of profitability;
  • the retail apocalypse;
  • the fact that it is so overvalued it makes Shopify look cheap;
  • or the completely unstable and fad-like nature of digital assets;

then maybe, just maybe, it could actually turn things around and become a stable and profitable business in the coming years.

Who knows?

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here

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