A GameStop Inc. store is shown in Encinitas, California, U.S., May 24, 2017. REUTERS/Mike Blake
Shares of GameStop Corp (GME.N) rose on Friday after the video game retailer announced plans to expand its non-fungible token (NFT) market and partner with crypto companies.
The company’s shares soared last year as they were at the center of a battle between small investors coordinating on online forums and Wall Street hedge funds that had taken short positions. Since mid-November, its shares have mostly fallen.
GameStop jumped 7.3% to $ 140.62 on Friday after the company reportedly built an online NFT trading center for virtual game collectibles and cryptocurrency partnerships on Thursday. A source familiar with the matter told Reuters about GameStop’s plans, which were reported by the Wall Street Journal.
GameStop declined to comment on the reports.
NFTs, which use blockchain to record the ownership of digital items such as images and videos, surged in popularity in 2021, leaving many confusedabout why so much money was being spent on copiable digital items that do not physically exist.
Highly volatile crypto assets have tumbled in recent months, with bitcoin plummeting to a more than three-month low of $42,001.97, down about 38% from its $69,000 all-time high in November.
Ether , used to buy NFTs, has slumped to $3,219.77, levels last seen in early October.
«Stocks themselves are speculative rather than fundamental, and to some extent cryptocurrencies are also not very speculative in nature . excessive exposure to cryptocurrencies could have an effect on the balance sheets of these companies.» , warned analyst Mirabaud Neil Campling. Short sales against GameStop increased by roughly 1 million shares in the past 30 days to 8.4 million, now worth $ 1.11 billion and equal to 13% of GameStop’s free float , according to data from S3 Partners.
Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, said Friday’s stock move is unlikely to be a small hedging rally.
«We would first need to erase recent market earnings on the short side, which means reverting to levels in the range of $ 170 $ 200 per share,» for a short squeeze to occur, said said Dusaniwsky.