GameStop’s New Crypto and NFT Wallet Unleashes Another Social Media Pump; Will the Stock Follow Suit?
GameStop has been shrewdly building up the hype around its much-anticipated NFT marketplace for a few months at least. Now, with the launch of a dedicated cryptocurrency and NFT wallet, the company is earning dividends from this strategy as social media conversations that cite GameStop spike, adding a potent tailwind to the stock’s social dominance ranking.
As a refresher, GameStop has now launched the beta version of its own Ethereum-based and browser-supported wallet that would allow users the ability to send, receive, and store cryptocurrencies (ERC 20 tokens and Ethereum) as well as NFTs conveniently.
It’s official! The GameStop Wallet is here.
— GameStop (@GameStop) May 23, 2022
As far as specifics are concerned, the wallet utilizes Loopring’s underlying technology by connecting directly with Ethereum Layer 2 solutions, thereby reducing the gas fees or transaction processing charges. Moreover, the GameStop wallet is currently available as a browser extension on Google Chrome and Brave, with a dedicated iPhone app expected to land shortly. On the security and privacy front, the wallet is non-custodial in nature and comes with a “12-word Secret Recovery Phrase” that acts as the “keychain” for all accounts within the wallet.
Of course, as we’ve mentioned repeatedly over the past few weeks, GameStop’s much-anticipated dedicated NFT marketplace is nearing an official launch, which in turn, is adding to the hype around the stock. This week’s wallet launch is further cementing the prognosis of this development materializing ahead of the July 2022 deadline.
GameStop Witnesses a Resurgence in Social Media Conversation Volumes, but the Stock Continues To Face Sturdy Headwinds
As per the tabulation by the Twitter account @santimentfeed, Monday’s GameStop wallet launch elicited diverse reactions from investors.
🎮 #Gamestop's digital asset wallet, which allows gamers to circulate #crypto and #NFT's on browsers, caused a social volume surge Monday. The $ETH-based wallet has received positive, to sarcastic, to hateful reactions, and is polarizing to say the least. https://t.co/HT0M3q3i5E pic.twitter.com/tjuEdndYyG
— Santiment (@santimentfeed) May 24, 2022
Moreover, the account’s related blog post noted that GameStop is currently experiencing another “social pump”.
In fact, as is evident from the chart above, the social media conversation volume around GameStop easily eclipsed that around the broader S&P 500 index on Monday.
This brings us to the crux of the matter. Social media conversation volumes can sometimes act as leading indicators for a stock price pump. However, given the fact that the broader market remains in the bearish phase, hammered by the relentless inflationary impulse that is now seeping into the margins of consumer-facing companies, excess savings depletion at the consumer level that is beginning to affect the top-line metric of some companies, and a hawkish Federal Reserve trying to moderate the wealth effect pervading throughout the US economy by de-rating equities, a sustained pump in GameStop shares remains quite improbable at this stage.
Consequently, we do not believe that GameStop shares will bottom out until the rest of the market does. We continue to monitor the percentage of S&P 500 stocks that still remain above their respective 200-day moving averages (S5TH chart) for an inkling as to when this eventuality will occur. As can be seen in the chart above, this metric is approaching previous capitulation levels but is still not at that crucial threshold.
In the meantime, the current social media pump should provide a brief tailwind to the GameStop shares, which recently plummeted to new year-to-date lows. Looking ahead, GameStop’s upcoming quarterly earnings on the 01st of June 2022 should provide another opportunity for investors to ascertain the stock’s near-term prospects.