GameStop shares jump 11% after the video game retailer partners with Sam Bankman-Fried's FTX crypto exchange
- GameStop shares jumped as much as 11% on Thursday.
- The video game retailer announced a partnership with Sam Bankman-Fried's FTX crypto exchange.
Shares of GameStop jumped as much as 11% on Thursday, after the video game retailer reported quarterly earnings and signed a new partnership with Sam Bankman-Fried's FTX cryptocurrency exchange.
The show of support from the crypto billionaire's company came as the company posted its second-quarter earnings late Wednesday, which showed losses ballooned in the period.
GameStop was trading 7% higher at last check, at $25.72, after climbing as high as $26.86 in premarket trading. The so-called "meme stock" closed down 4.4% at $24.04 on Wednesday before the financial update and FTX news.
GameStop's bosses want to introduce more of their customers to FTX's community and its digital-asset marketplaces, they said in a press release. They will also work with the crypto giant on new e-commerce and online marketing initiatives, and some GameStop stores will begin stocking FTX gift cards.
The retailer's net sales slid 4% year-on-year to $1.14 billion in the second quarter, widening its net loss by 76% year-on-year to $108.7 million.
GameStop executives pointed to stronger sales of collectibles, shrinking overheads, and more inventory as positive steps towards revitalizing the largely physical retailer.
The company has launched a digital wallet and its own non-fungible token (NFT) marketplace in recent months, as it seeks to diversify its revenue streams, attract a new generation of customers, and appeal to crypto and blockchain fans.
Its stock price was down 37% at $24 as of Wednesday's close — a fraction of the $121 peak it reached on a split-adjusted basis in January 2021. However, its shares are still up more than four-fold since the end of 2020.
GameStop shares briefly skyrocketed as much as 2,500% in January 2021 after votes of confidence from Michael Burry of "The Big Short" fame, "Roaring Kitty" YouTuber Keith Gill, and Chewy cofounder Ryan Cohen helped spur an army of retail investors to buy the stock en masse.
The GameStop saga sparked wider interest in meme stocks — typically struggling, low-valued businesses with high levels of short interest, such as AMC Entertainment and Bed Bath & Beyond.
Many retail investors pile into meme stocks because they want to boost their prices and get rich overnight, punish hedge funds for betting against their favorite companies, and thumb their noses at Wall Street by embracing bankrupt or deeply distressed companies.