At first glance Draft Kings ((((DKNG 0.86%). When GameStop ((((GME 0.92%). There seems to be little in common. One is a new online gaming site and the other is an established tech retailer working to redefine itself.But two Consumer discretionary stock It retains one important thing in common. They have supported some of the expectations for building a non-fungible token (NFT) marketplace.
NFTs are unique and secure data attributes stored in a distributed ledger. In recent months they have lost support and these markets can be detrimental to both stocks. Still, regardless of the NFT, one strain may appear to hold more potential.
NFT Marketplace
The popularity of NFTs has skyrocketed in recent years. However, according to the industry website NonFungible, interest has dropped significantly. Its sales volume fell by almost 50% in the first quarter of 2022.
It’s unclear if NFTs were a fad or just encountered a rough patch. However, despite the turmoil, both DraftKings and GameStop have moved to enter this market.
DraftKings has already launched a marketplace. The NFT site specializes in sports, entertainment and cultural collections. It also supports curated NFTs and secondary transactions.
In contrast, GameStop hasn’t launched an NFT site yet, but plans to launch it by the end of July. In addition, we plan to target markets different from DraftKings. We will focus more clearly on the Metaverse and emphasize the sale of blockchain tokens that represent Metaverse assets. The digital real estate and weapons used in the game are examples of what the market may sell.
Evaluate their potential
Of the two NFT marketplaces, it’s currently easier to measure the potential of DraftKings. This is mainly because it is a site currently in operation that was launched in 2021. Despite its starter status, DraftKings didn’t elaborate on NFTs in its first-quarter earnings report. We also do not publish financial figures related to this segment.
In addition, most of the NFT-related news focused on working with other parts of the DraftKings ecosystem. Among those products was the Prime Time NFT series, which was released before the NCAA Basketball Tournament, designed to promote engagement.
As for GameStop, its NFT market may be worth seeing when it becomes available. ReportLinker.com forecasts a combined annual growth rate of 46% for the Metaverse by 2031. Such growth could be a good sign for GameStop’s NFT market.
Still, the NFT market will probably have to recover. In addition, GameStop must show that it can effectively execute NFT strategies if it wants to beat users and investors.
Do investors need to buy either stock based on the NFT Marketplace?
After all, NFT sales are declining, and neither DraftKings nor GameStop have proven their position in the NFT market. Therefore, investors should not consider NFTs when buying either stock.
Nevertheless, if forced to choose one of these NFT-related stocks, Treasury seems to lean its decision towards DraftKings. First-quarter revenue was $ 417 million, up 34% year-over-year. Revenue growth remains at a high level, although not as high as the 111% growth in 2021.
In contrast, GameStop’s $ 1.4 billion revenue increased by 8% in the first quarter (until April 30), down from the 18% revenue increase experienced in fiscal year 2021. GameStop’s fiscal year is one month, so it’s not a complete comparison. Behind DraftKings, DraftKings consistently showed faster revenue growth.
Indeed, GameStop’s share price exceeded DraftKings last year. Also, the ratio of price (P / S) to DraftKings sales of 3.5 is far higher than a multiple of GameStop’s sales of 1.5.
Nonetheless, DraftKings has built an online gaming ecosystem in the emerging online gambling market with fantasy sports, sportsbooks and casino games that could benefit from synergies with the NFT market. .. As more states legalize online games, this ecosystem could serve as the most prominent alternative to visiting casinos.
vice versa, GameStop’s business model has problems.. The rise of e-commerce and the dominance of online game sales threaten the reason GameStop exists. It has shifted its focus to online sales and collectibles, but these are established businesses where GameStop is not meaningfully competitive.
Also, as mentioned earlier, the outlook for GameStop in the NFT business is uncertain at best. The same is true for the DraftKings NFT business, but even if both companies succeed with non-fungible tokens, DraftKings will do better.
