GameStop posts holiday season loss, has shared little about NFT marketplace ahead of Q2 launch – The Dallas Morning News
GameStop reported a $147.5 million loss over the period that included the 2021 holiday season and announced that it will launch its marketplace for non-fungible tokens by the end of second quarter 2022.
Despite the losses, revenue is growing at the Grapevine-based video game retailer that’s on a mission to modernize its e-commerce operations.
GameStop had a $1 billion increase in annual sales in 2021 over 2020. And it reported $2.25 billion in sales during the fourth quarter, which includes the holiday season, a slight increase over its 2019 pre-pandemic fourth-quarter sales of $2.19 billion. Still, the company is burning cash to the tune of a $1.94 loss per share, according to filings.
“We are still in the early stages of our transformation,” CEO Matt Furlong told investors Thursday, adding that the company’s new leadership has had to reinvent the company from within. “GameStop is a completely different company today than it was at the beginning of the fiscal year.”
Over the last year, GameStop has changed its board and management team. It also said it has hired hundreds of new employees with backgrounds in e-commerce. It invested in new fulfillment facilities and an enhanced customer support call center, launched a redesigned mobile app and expanded its product catalogue to include more PC gaming accessories and tech.
It missed out on the video game industry’s move from physical software sales to digital, but the retailer has signaled to investors that it’s serious about capitalizing on the burgeoning world of non-fungible tokens beginning with its launch of its NFT marketplace later this year.
GameStop announced in February that it had partnered with an Australian startup called ImmutableX to launch a marketplace where creators could sell NFTs for use in video games. NFTs use blockchain technology to assign a unique identifier to a digital product, allowing a person to own it. In the gaming industry, companies have proposed using NFTs to power unique in-game accessories or real estate.
Wedbush Securities analyst Michael Pachter said seeing GameStop lose money over the holiday season was shocking, and he questioned whether an NFT marketplace for gaming led by GameStop is even feasible.
The analyst pointed to GameStop’s history of serving console gamers and largely ignoring PC gaming. The retailer would need to develop partnerships with console-makers Microsoft, Sony and Nintendo to make its NFT marketplace compatible with consoles. On PCs, it would likely need a video game distribution platform like Steam or a relationship with one.
“How do you get your NFT into the game? And if you’re the game developer, do you want GameStop to take a cut?” Pachter said.
It’s unclear how GameStop’s marketplace would function. In its filings, GameStop lists its new initiatives in the NFT space as a potential risk to investors.
GameStop board chairman Ryan Cohen, who pledged to turn the company around when he took over, hasn’t said anything publicly since tweeting about how the government should crack down on hedge fund short sellers on Wednesday. His activist investment firm RC Ventures recently revealed a 10% stake in Bed Bath and Beyond and is pushing for a sale of all or part of that business.
The company’s stock price has been in decline since January 2021 when it peaked at $325 a share, driven to astronomical levels by retail investor enthusiasm. …….