GameStop’s stock rose Friday after a report that the video game retailer plans to expand its market for non-replaceable tokens (NFTs) and partner with crypto firms.
The company’s shares skyrocketed last year as it was at the center of a battle between retail investors who coordinated on online forums and Wall Street hedge funds that had taken short positions. Since mid-November, the stock has largely fallen.
On Friday, GameStop rose 7.3 percent to $140.62 (about Rs. 10,440) after it was reported late Thursday that the company would build an online hub for trading NFTs for virtual game collectibles and forging cryptocurrency partnerships.
A source familiar with the case told Reuters about GameStop’s plans, which the Wall Street Journal reported.
GameStop declined to comment on the posts.
NFTs, which use blockchain to record ownership of digital assets such as images and videos, became hugely popular in 2021, leaving many confused as to why so much money was being spent on copyable digital assets that do not physically exist.
Highly volatile crypto assets have plummeted in recent months, with Bitcoin plunging to a more than three-month low of $42,001.97 (about Rs. 31.18 lakh), about 38 percent below its $69,000 (about Rs. 51.21). lakh) ever high in November. Bitcoin price in India on January 8 at 11:15 am IST was Rs. 33.92 lakh.
Ether, used to buy NFTs, has fallen to $3,219.77 (about Rs. 2.39 lakh), levels last seen in early October. The Ether price in India on January 8 at 11:15 am IST was Rs. 2.6 million.
“Meme stocks are speculative rather than fundamental and to some extent cryptos are also not very speculative in nature… overexposure to cryptos could have an effect on the balance sheets of these companies,” Mirabaud analyst Neil Campling warned.
Short selling against GameStop rose by about 1 million shares to 8.4 million in the past 30 days, now worth $1.11 billion (about Rs. 8240 crore) and equal to 13 percent 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 price was unlikely to be a short-term rally.
“First, we should wipe out recent mark-to-market gains on the short side, meaning we need to bounce back to levels in the $170-$200 (about Rs. 12,600 to 14,800) price range,” to conclude a short squeeze to take place, Dusaniwsky said.
© Thomson Reuters 2021
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