GameStop reports nearly $100 million loss in Q3, shuts down digital asset division, crypto no longer a focus

GameStop, which once made a comeback against Wall Street through the battle with retail investors, actively ventured into the cryptocurrency field recently. However, after incurring a net loss of $94.7 million in Q3 2022, GameStop announced the layoffs of its digital assets division and stated that it will no longer focus on cryptocurrency.

GameStop CEO Matt Furlong seems concerned about the recent chain reactions in the cryptocurrency market affecting shareholder confidence. In a financial earnings conference call on December 7, he clarified that the company has been "actively minimizing cryptocurrency risks over the past year" and currently does not hold any cryptocurrency.

GameStop Reports to SEC: Continuing to Focus on Digital Assets and NFTs

Despite GameStop's CEO announcing the removal of the digital assets division to shareholders on the 7th, the document submitted to the SEC on the same day stated that GameStop will continue to make efforts in the field of digital assets and blockchain technology.

While no longer seeing cryptocurrencies as the current focus and continuing to develop NFTs may not be entirely conflicting, the company has not responded publicly to this matter.

Even without looking at the SEC document, a simple search on Google reveals that GameStop is actively exploring the NFT and GameFi sectors in an attempt to transform:

1. April 2021, GameStop recruits NFT analysts
2. October 2021, releases 8 NFT job openings
3. March 2022, NFT platform test version launched
4. September 2022, partners with FTX US (partnership now terminated)

Memes Ultimately Succumb to Reality

In 2021, GameStop, affected by online shopping and the pandemic, became a sensation in the retail investor battle against Wall Street short sellers. GameStop's stock GME became the most powerful meme stock, soaring to a high of $483 per share. It also announced a new stock offering, earning a financing windfall.

Subsequently, the rise of NFTs, GameFi, and the meme king Dogecoin prompted GameStop to begin researching the integration of gaming and NFTs, attempting to use blockchain technology to transform the company into a tech firm.

Some successes were indeed achieved, such as reaching a trading volume of $3.5 million within two days of the NFT platform launch. However, a market downturn led to an 80% drop in trading volume, and the head of the blockchain division resigned.

1. September 2022, head of blockchain division resigns
2. November 2022, partnership with FTX US terminated
3. December 2020, announcement of digital assets division closure

Nevertheless, CEO Matt Furlong still believes in the long-term potential of NFTs. He stated:

We remain deeply convinced that the application of digital assets in games has long-term development potential, but we will not risk shareholders' capital in the cryptocurrency field.

GameStop may not have completely given up on its transformation, but reality is harsh. GameStop has reported losses for six consecutive quarters. In Q3 of this year, it incurred a loss of $94.7 million, and in Q2, a loss of $108.7 million.