Grapevine-based GameStop Corp. reported mixed second-quarter results, but showed it was considering a shift in strategy toward non-fungible tokens by announcing a partnership with cryptocurrency exchange FTX US.
Net sales were $1.14 billion in the second quarter, the company said in a statement Wednesday. Analysts had expected $1.28 billion. The company’s net loss nearly doubled to $108.7 million. GameStop hasn’t reported quarterly earnings since the end of 2021.
Meanwhile, GameStop said it will collaborate with FTX US, one of the largest cryptocurrency exchanges, on new e-commerce and online marketing initiatives, and begin offering FTX gift cards. in some stores. The financial terms of the partnership are not disclosed. GameStop shares rose about 13% in extended trading.
Gamers are among the largest target audience in the NFT industry. In June, the company launched a digital asset wallet to allow gamers to store, send, and receive cryptocurrencies and NFTs, and in July it rolled out an NFT Marketplace, despite the fact that Sales of these digital artworks have declined amid the crypto industry crash.
FTX US recently launched a stock trading service for all US users, including non-crypto investors, in an effort to expand its customer base and increase assets under custody. It has also partnered with Reddit to enable crypto payments by Reddit users.
The partnership with GameStop also unites two companies with a shared bond: Robinhood Markets Inc., the free trading app that investors used to drive up the price of GameStop shares during last year’s stock market rally. FTX US Founder and CEO Sam Bankman-Fried took a 7.6% stake in Robinhood earlier this year.
GameStop’s strategy has swerved several times in recent years as game sales shifted from physical discs to online downloads. Much of its retail business was canceled during the Covid shutdowns and results were further hampered by supply constraints on consoles. Overall gaming spending fell 13% in the second quarter from a year earlier, according to industry researcher NPD Group.
Although it still sells games, hardware, and toys, GameStop’s management has pushed the company down new avenues of growth with disappointing results so far. In June, the company launched a digital asset wallet to allow gamers to store, send, and receive cryptocurrencies and NFTs. In July, GameStop has rolled out its NFT Marketplace during a major downturn for the crypto industry. On day one, the market returned $44,500, according to Ars Technica.
Just days before the market launch, GameStop fired CFO Mike Recupero and laid off several employees. While the company said at the time that it was “reducing headcount” after a wave of hiring in 2021, it has also faced a conflict of strategy between recent hires, many of whom were from the commerce giant. electronic. Amazon.co.uk Inc., and GameStop staff members with experience selling physical games, Bloomberg reported. The skills associated with online sales do not translate into negotiating commercial leases and operating stores.
Part of the wave of new hires two years ago included CEO Matt Furlong and the now deceased chief financial officer, both of whom came from Amazon with expertise in e-commerce. GameStop President Ryan Cohen founded pet e-commerce site Chewy Inc.
With Cohen, “you have a guy who is very successful in selling merchandise to people who make recurring purchases, like dog owners,” said Wedbush Securities analyst Michael Pachter. “He’s trying to apply this model to a consumer who doesn’t make recurring purchases. And it competes with console manufacturers who offer games electronically and consumers who also prefer to download games electronically.
At its stores, GameStop’s pivot to focus on toys and collectibles appears to be paying off with sales reaching $223.2 million for the quarter, up from $177.2 million in the same quarter last year. last.
Cohen, also an activist investor through his RC Ventures, recently came under fire after quitting his job at fellow meme stock Bed, Bath & Beyond Inc. for a profit of $68.1 million at the mid August. Retail investors who had flocked to him during the meme stocks craze felt burned by his departure and racked up millions in losses. GameStop’s stock plunged in stride.
During the pandemic, GameStop has become emblematic of the so-called meme stock craze whereby retail marketers have jacked up the prices of certain companies, prompted by chatter on Reddit, Discord and other social media, rather than by the fundamentals of the company. Its stock has since been volatile. The shares are down 35% this year.