In a bid to switch from a brick-and-mortar retailer to an e-commerce and crypto company, GameStop (GME) is releasing a “beta version” of its crypto and NFT wallet.
The company’s first crypto product arrived Monday as investor interest for crypto as well as meme and tech stocks has drastically fallen over the last six months.
While GameStop’s wallet offering “marks the transition of GameStop from a retailer into a technology company,” the “markets don’t value that right now,” Joe Fonicello, a long time GameStop bull who helps run GMEdd.com, a crowd-sourced effort to track the company’s developments, told Yahoo Finance.
Investors can use the GameStop wallet to buy, sell, and hold non-fungible tokens (NFTs) and other crypto assets. They will also retain all the responsibility for securing their crypto assets by way of a password and recovery phrase.
Unlike custodial crypto wallets, which are most often managed by crypto exchanges, non-custodial wallets don’t offer investors a chance to recover their password or recovery phrase from the company offering the wallet. Effectively, this means investors lose their crypto funds if they lose both passwords, but are also less vulnerable to exchange-related hacks.
GameStop’s digital wallet comes ahead of its previously announced NFT marketplace that launches before the end of July. It will be built through a partnership with Ethereum layer 2 network, Immutable X.
Months before indicating crypto ambitions this time last year, GameStop became a finance and pop culture sensation in January 2021 when retail traders — particularly on Reddit — bid up its share price from below $18 to an intraday peak of $483 on January 28.
While on the surface the stock’s upward trajectory relative to the company’s poor earnings defied Wall Street analyst opinions, its initial leap reflected a so-called short squeeze.
Based on several premises including that GameStop had a recovery plan, hordes of retail traders snapped up GME shares and bought call options in a coordinated effort that eventually forced short sellers to buy back their positions at a higher cost, causing the stock’s price to further spike.
Since then, the stock has fluctuated in a range of more than $200 per share but steadily traded down in value since November.
Year-to-date shares of GameStop (GME) have dropped more than 37% from $152.8 to $95. On Monday, share finished 0.49% higher at $96.13.
“We think that the easy money made by leveraged-long trades in the meme-stock era is over,” said Ken Worthington, a J.P. Morgan analyst in a research note last week which qualified how diminished retail investor interest has hurt shares of Robinhood.
At the same time, cryptocurrencies have also been beaten down. Bitcoin (BTC) has lost 39% for the period, down from $47,299 and currently changing hands just above $29,000. Technology stocks haven’t fared well either. The Nasdaq Composite closed Monday 27% below where it stood at the year’s start.
In the last year, three Wall Street firms — Wedbush Securities, Jefferies and Ascendiant Capital — have published ratings on GameStop. In late March, Wedbush maintained GME’s “underperform” rating but also downgraded its price target from $45 to $30.
As crypto boomed last year, hedge funds and other institutions bought into the asset class, causing bitcoin and ether to increasingly correlate with technology stocks on macro investor sentiment. As the correlation continues, analysts believe crypto will fall alongside high-growth tech stocks as central banks tighten monetary policy.
To be sure, GameStop’s forays into crypto and NFTs could boost its underlying revenues — thanks to crypto transaction fees.
Year to date, gaming NFTs — the asset segment GameStop is best positioned to service — has fallen on particularly tough times. According to blockchain analytics provider Nansen, investors who put $100 into Nansen’s would have lost 81% of their original investment.
David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.