After the video game retailer signed a new partnership with Sam Bankman-Fried’s FTX cryptocurrency exchange and reported quarterly earnings, the shares of GameStop leaped as much as 11% on Thursday.
The encouraging support came from the crypto billionaire’s company as the company posted its second-quarter earnings late Wednesday.
At last check, GameStop shares were up 7%, up to $25.72, after reaching $26.86 in premarket trading. Prior to the financial update and FTX news, the so-called “meme stock” closed down 4.4% at $24.04.
A press release by GameStop said the company wants to introduce its customers to FTX’s community and digital assets marketplace. Besides working on the new e-commerce and online marketing initiatives, some GameStop stores will begin stocking FTX gift cards.
In the second quarter, the retailer’s net sales fell by 4% to $1.14 billion, widening its net loss by 76% to $108.7 million.
In their attempt to revitalize the physical retailer, GameStop executives cited stronger sales of collectibles, shrinking overheads, and more inventory.
Recently, the company has launched a digital wallet and a non-fungible token (NFT) marketplace as part of an attempt to diversify its revenue streams, attract a new generation of customers, and appeal to crypto and blockchain enthusiasts.
As of Wednesday’s close, its stock price was down 37% to $24 – a fraction of the $121 peak it reached in January 2021. However, its shares have still increased by over fourfold since 2020.
An army of retail investors bought GameStop stock en masse after Michael Burry of “The Big Short” fame, Keith Gill of “Roaring Kitty” YouTube fame, and Chewy cofounder Ryan Cohen endorsed the company.
Retail investors flock to meme stocks in order to boost their prices overnight, punish hedge funds for betting against their favorite companies, and mock Wall Street by investing in bankrupt or deeply distressed companies.