In a desperate attempt to recreate the short squeeze from a year ago, GameStop stock is surging after hours after a report from the WSJ that the company which once was a video game retailer and now nobody really knows what it does, is launching a division to develop a marketplace for nonfungible tokens and establish cryptocurrency partnerships - in short throwing all possible catchy buzzwords at the wall and hoping something sticks - pushing the company into much-hyped areas as it tries to turn around its core videogame business.
According to the report, the retailer has hired more than 20 people to run the unit, which is building an online hub for buying, selling and trading NFTs of virtual videogame goods such as avatar outfits and weapons. And since GameStop is rather late to this particular market, the company is reportedly asking select game developers and publishers to list NFTs on its marketplace when it launches later this year, the WSJ sources said.
GameStop also is close to signing partnerships with two crypto companies to share technology and co-invest in the development of games that use blockchain and NFT technology, as well as other NFT-related projects. The retailer expects to enter into similar agreements with a dozen or more crypto companies and invest tens of millions of dollars in them this year, the people said.
While GameStop has been working to reset its business after years of losses, it has so far failed to generate any traction and only the windfall of last year's massive short squeeze which the company used to sell stock into and raise capital, has kept it alive.
The news has predictably sent GME stock sharply higher after hours in what appears to be yet another short squeeze, which will come as welcome news to longs who saw the stock price drop to the lowest level since March 2021 this week. The question is how long until this latest euphoric frenzy fades, and trapped longs take advantage of the move higher to offload their positions.