The company's shares soared last year as it was at the
centre of a battle between small investors coordinating on online forums and
Wall Street hedge funds that had taken short positions. Since mid-November, its
stock has mostly declined.
On Friday, GameStop jumped 7.3 percent to $140.62 after
reports late on Thursday that the company would build an online hub for trading
NFTs for virtual game collectibles and establish cryptocurrency partnerships.
A source familiar with the matter told Reuters about
GameStop's plans, which had been reported by the Wall Street Journal.
GameStop declined to comment on the reports.
NFTs, which use blockchain to record the ownership of
digital items such as images and videos, surged in popularity in 2021, leaving
many confused about why so much money was being spent on copiable digital items
that do not physically exist.
Highly volatile crypto assets have tumbled in recent months,
with Bitcoin plummeting to a more than three-month low of $42,001.97, down
about 38 percent from its $69,000 all-time high in November.
Ether, used to buy NFTs, has slumped to $3,219.77, levels
last seen in early October.
"Meme stocks are speculative rather than fundamental
and, to a degree, cryptos are also little speculative in nature ... too much of
an exposure to cryptos could have an effect on the balance sheets of these
companies," warned Mirabaud analyst Neil Campling.
Short selling against GameStop increased by about 1 million
shares to 8.4 million in the past 30 days, now worth $1.11 billion and
equivalent 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 share move was unlikely to be a short-covering
rally.
"First we would need to wipe out recent mark-to-market
profits on the short side, which means getting back to levels in the $170 -
$200 stock price range," for a short squeeze to happen, Dusaniwsky said. ©
Reuters