GameStop Corp. reported a surprise loss during the holiday quarter and said it would launch a marketplace for nonfungible tokens by the end of the second quarter of fiscal 2022.
The company reported an adjusted loss of $1.86 a share, while analysts had projected a profit of 84 cents. Net sales rose 6.2% to $2.25 billion in the three months ended Jan. 29, the video game retailer said Thursday in a statement. Analysts had projected $2.23 billion. The shares fell about 9% in extended trading.
GameStop has suffered from a combination of supply chain issues and an opaque business strategy. Over the last several years, it has churned through a variety of business concepts with mixed reactions from investors and customers.
The market has been waiting to hear more about GameStop’s plans for its NFT marketplace initiative after reports of the project surfaced earlier this year. The company last month announced a partnership with Australian gaming startup Immutable X to establish a fund to provide grants to NFT content creators. In the earnings announcement, GameStop said it would provide Immutable with as much as $150 million in IMX tokens if it achieves certain milestones.
Chairman Ryan Cohen, the co-founder of pet supply company Chewy Inc., joined the board last year with a vision to revive growth, which has slowed as players shifted from buying gaming discs to digital downloads. The company was further battered by the Covid pandemic which shuttered retail shops.
“It’s hard to see much a future for the company given the huge secular shift in its core end market,” Vital Knowledge analyst Adam Crisafulli said. “And while gimmicks like an NFT marketplace may help attract interest in the stock, it’s unlikely to translate into a huge financial benefit.”
GameStop’s shares have swung wildly over the past year. They gained almost 700% in 2021 but are down 41% this year, closing at $87.70 in New York on Thursday.
The latest push into NFTs has excited investors, but there are still few details about the plan. The company said Thursday that it has hired “dozens of additional individuals with experience in areas such as blockchain gaming, ecommerce and technology, product refurbishment and operations.”
Reggie Fils-Aime, a former board member of GameStop and former president of Nintendo of America Inc., condemned the company’s recent direction at a panel at the South by Southwest conference last week.
“You can go on the GameStop website. Try and find a strategy. There is no articulated strategy,” Fils-Aime said. “I come from the business perspective that you need to articulate your strategy to all of your key constituents.”