Investors who rushed into GameStop (GME) stock on hopes that the company’s crypto business would boom might need to rethink their strategy. It turns out that GameStop’s non-fungible token (NFT) marketplace sales that initially soared are now falling. GME stock is taking the heat amid the shrinking NFT sales.
GameStop primarily operates a video game retail business. In July, it moved to try its luck in the crypto space, launching a platform for trading NFTs. GME stock spiked on the back of the NFT marketplace debut as investors cheered to welcome another crypto stock opportunity.
In GameStop NFT marketplace’s early days, the business boomed. On the first day, for example, the company generated $44,500 in fee revenue on sales volume of $1.98 million. That was in mid-July.
On August 22, GameStop’s daily NFT fee revenue dropped below $4,000, according to DappRadar data. The company charges a 2.25% fee on NFT trades that take place on its platform. GameStop’s NFT business has been on a decline in recent times, with sales volume, number of traders, and average item prices, all falling. The weakening crypto business comes as GameStop is also facing criticism for allowing the sale of copyright-infringing NFTs on its platform.
GameStop Joins the Meme Stocks Crash
GameStop shares fell about 5.5% to $34.50 on August 22. The decline came on a generally bad day for meme stocks, as AMC Entertainment (AMC) and Bed Bath & Beyond (BBBY) also plunged nearly 42% and 16%, respectively.
Is GME a Good Stock to Buy?
Despite the recent drop, GameStop stock is still up more than 40% over the past three months. However, Wall Street is not excited about the stock. According to TipRanks’ analyst rating consensus, GME stock is a Moderate Sell. The average GameStop stock price prediction of $17.50 implies over 49% downside potential.
GameStop remains one of the most discussed meme stocks on retail investor forums such as Reddit’s WallStreetBets and Stocktwits. Indeed, many retail investors are willing to bet against Wall Street when it comes to GME stock. TipRanks Stock Investors tool shows that investor sentiment is currently Positive on GameStop. In the past 30 days, 1.9% of the best-performing portfolios tracked by TipRanks increased their exposure to GME stock. In a number of rounds, retail investors have won against Wall Street elites by sparking short squeeze in meme stocks like GME and AMC.
Final Thoughts
While GameStop’s NFT business may not be in great shape now, it can deliver if the company can find a way to turn it around. In 2021, NFT sales hit $25 billion. With GameStop’s total NFT sales volume at just $18 million since the marketplace debuted, the growth opportunity ahead is still enormous.
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