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GameStop partners with crypto market FTX, posts lower than expected loss By Reuters

By September 8, 2022No Comments

© Reuters. A screen displays GameStop’s logo and business information on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 29, 2022. REUTERS/Brendan McDermid

By Eva Mathews

(Reuters) – GameStop Corp on Wednesday reported a weaker-than-expected quarterly loss and a partnership with FTX US to expand its presence in the cryptocurrency space, sending the video game retailer’s shares up 10% in the extended trade.

The company will start selling FTX gift cards in some of its stores under the partnership, the financial terms of which were not disclosed.

GameStop (NYSE:) launched a digital wallet earlier this year that it says would enable transactions on a marketplace it is building for gamers and others to buy, sell and trade non-fungible tokens, or NFTs.

“The FTX partnership is unlikely to generate significant revenue or profit, but it sounds good, so it’s positive,” said Wedbush analyst Michael Pachter.

Last year, GameStop was at the center of a social media-fueled trading frenzy that sent its stock skyrocketing.

The company has since reshuffled its management in a bid to reverse years of sluggish sales and has bolstered its e-commerce capabilities as online shopping accelerated during the pandemic.

On an adjusted basis, GameStop lost 35 cents per share in the second quarter, versus an estimate of 38 cents, according to Refinitiv IBES data.

In the quarter under review, the company fired chief financial officer Michael Recupero and announced a four-for-one stock split in an effort to rekindle some of the retailer interest in its stock.

However, GameStop’s results come at a time when game companies are facing slowing demand for video games from pandemic highs, raising doubts about their ability to weather an economic downturn.

Shares of the company were trading at $26.56 after the bell.

Some investors feared GameStop Chairman Ryan Cohen might sell shares, but since he didn’t, the stock market rally reflected investors’ relief, Pachter said.