GameStop shares are set for double-digit gains Friday after news that the video game retailer is planning to create a marketplace for nonfungible tokens, or NFTs.
The speculative stock surged more than 10% in morning trading. At its session high, the stock jumped more than 20% on the day. Its shares are up nearly 7% in 2022, but still off more than 60% from their 52-week high.
The Wall Street Journal reported Thursday after the bell GameStop’s potential move into the NFT space. One source close to the situation confirmed the plans to CNBC, saying it has been in the works for months.
GameStop also plans to establish cryptocurrency partnerships to create games and items for the marketplace, the source said.
“GameStop is in a very unique position, because a lot of these NFT projects are starting to add gaming utility behind the NFTs themselves,” said Adam Hollander, an NFT investor and creator of the “Hungry Wolves” NFT collection. “GameStop is well positioned, in my opinion, to be able to capitalize on that they have hundreds of millions of people that play video games that least recognize GameStop as a credible brand.”
The company has been quietly hiring talent in blockchain and crypto with more than two dozen members on the team now, the source said.
NFTs, which use a technology that allows proof of ownership of digital goods to be stored on a blockchain, often Etherium. It has been one of the most hyped sectors in technology. OpenSea, the best-known NFT marketplace, was recently valued at $13.3 billion by investors.
GameStop’s marketplace will focus on virtual video game goods such as character outfits and weapons, according to the WSJ report.
In January 2021, retail traders teamed up on Reddit’s WallStreetBets’ forum, aiming to bid up GameStop‘s shares, which were heavily shorted by hedge funds. The retail buying triggered massive short covering among hedge funds that fueled the rally even further.
The stock ended 2021 up 687% after a year of wild trading. Some investors were disappointed by the lack of concrete turnaround plans for its e-commerce transition, which is led by activist investor and Chewy co-founder Ryan Cohen.
— CNBC’s Frank Holland contributed reporting.