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GameStop to enter NFT market, Sonos wins patent battle against Google

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Yahoo Finance's Jared Blikre reports on the surge in GameStop stock following a report that the video game company is entering the NFT market and Sonos winning a product import ban in a patent battle against Google.

Video transcript

JULIE HYMAN: So let's talk about some stuff that's not little changed. And our Jared Blikre, by the way, is joining us for this discussion of some of the movers that we are watching. Got to start with GameStop, and that's why I wanted Jared to participate in this as well because I know he watches the meme stocks very closely, as do we. I said at the top of the hour sort of tongue in cheek that this is the most 2021 headline, but it's coming out in 2022-- that is meme stock plus NFT plus crypto. GameStop is starting a unit to develop a marketplace for NFTs and also to establish crypto partnerships.

Now this is something that the company mentioned on that very brief earnings call that it had. But this seems to be-- and this is according to the Wall Street Journal-- this seems to be an actual development of this thing. And, you know, I would say that when you look at sort of meme stock companies or buzzy companies generally, when they tend to say, oh, we're getting into NFTs, we're getting into crypto, it's kind of like, they're just sort of chasing the latest craze. At least with GameStop, it's a video game company, and there is some sort of logic, right, perhaps in this connection. Brian Sozzi, what do you make of this? And then we'll get Jared to jump in.

BRIAN SOZZI: Yeah, I'll get out of the way quickly for Jared. I'll just add this. You're right, Julie. It does make sense because in this world of NFTs, in the future of the metaverse, to seeing GameStop create an NFT marketplace, and they already have created a website for this, trying to find new creators of NFTs. So that website already exists. I would say this does make sense. At some point, I think it does also reflect them trying to get a higher valuation in the market because as we know, NFTs are extremely buzzy. The valuations on some of these companies that are in the space have gotten very hot. So I'm not surprised to see GameStop going this route. But to your point, Julie, this does, at least on paper, make some form of sense.

JAFRED BLIKRE: I'll just jump in here. I'm surprised AMC didn't do this first. Why is AMC not into NFTs? And I kid a little bit. But the only thing that could be more bullish for GameStop is if, in fact, they commence some kind of buyback, stock buyback program. I'm looking at the chat on the YFi Interactive. This is a one-year chart of GameStop here. And the level that we're at right now is about 160. So I'm going to place that right about here.

So in the grand scheme of things, first of all, yesterday, we closed at the lowest level since, I think, last May. It may have even been before that. But in the grand scheme of things, 22% move not even scratching the surface of some of the volatility that we saw one year ago. Here's that big spike up that we saw in late January and early February.

But, you know, all in all, the meme stocks have had a rough time. Look at this over the last month here. I'm going to take the after hours quotes on so we can see some of the big movers to the downside. Naked Brands, that's down almost 50%. Admittedly, I don't know a lot of these tickers. Here's Newegg. That's down 33%. Tilray down 30%. Robinhood hitting record lows recently. That's down almost 30%.

And so the meme stocks, along with a lot of other what I call the canaries, have just gotten slammed. And here's a look at some of those canaries. Let me just do it on a four-day basis. This is what happened this year. The only thing outperforming this year in all these sentiment indicators is regional banks and value stocks. So value is that ETF that tracks the financials and the energy. We know those are doing well. What's not doing well? IPOs, ARK Innovation, solar, software, biotech, all these things, and the list goes on. But I put meme stocks in the same group, guys.

JULIE HYMAN: Jared, far be it for me to correct you, but AMC already has some NFTs. They released some NFTs in-- back in December, apparently one that has to do with people who buy AMC's tickets. And then it's also for AMC shareholders that there are NFTs.

JAFRED BLIKRE: And they're doing buybacks, too, right? That was in the news the other day. I mean, it's all coming into play here.

JULIE HYMAN: Yeah, exactly. Sozz.

BRIAN SOZZI: Yeah, you know-- yeah, it's good to see, I think, GameStop trying to pull this off. If they want to turn themselves into modern day digital Sotheby's, by all means, go for it. But if GameStop can pull it off-- and this has been a horribly run company with essentially no soul in terms of corporate culture, except that of losing-- it could attract other entrants into the space. Why wouldn't eBay want to try to create its own NFT marketplace? If GameStop has some success in this, look for others to get in here. Why doesn't Target want to get in? Why not Walmart? Why not eBay? So-- or even Etsy. So be careful what you wish for if you're a GameStop bull.

JULIE HYMAN: You're just baiting these people at this point, the holders there. I mean, listen.

BRIAN SOZZI: You're reporting the news, Julie. Reporting the news.

JULIE HYMAN: If losing is up 600% over the last year and you're somebody who bought early on, then give me the losing. Like, OK. That's-- you know what I'm saying? I don't know. It's all--

JAFRED BLIKRE: Where's the buy? That's what I want to know.

JULIE HYMAN: It's all-- yeah, it's all in the timing. All right, I want to move on to another mover, this one less controversial. And that is Sonos. And this has to do with an interesting patent battle that the company has been having with Google. Basically, it has to do with speakers and other devices that are made overseas by Google. And a trade-- the US Trade Agency will limit the imports of some of those devices. It's a little bit thorny here, a little bit complicated, but effectively, as I see it, what it does is remove at least a short-term overhang for Sonos, Sozz.

BRIAN SOZZI: Yeah, big win for a friend of the show, Patrick Spence. That is the CEO of Sonos. He has been fighting this good fight against Google, I would say approaching close to two years. So a big win for him and his team. And one other point here, Julie, on Sonos. It not only relates to what you just mentioned, but also it validates Sonos's patent portfolio. And this is a very extensive portfolio of patents for Sonos. And it was a key to their-- key to the investment thesis when the company went public a couple of years ago. So this validates that lucrative portfolio of patents. And I think that's part of the reason why you're seeing the stock rise here in the early going.

JAFRED BLIKRE: Yeah, and I'll tell you what. I'm looking at a one-year chart of Sonos here, and it really hasn't done a lot. In fact, the price action pretty negative on-- let me just put this on a candlestick basis. And you can see really just testing the lows from a few weeks ago, which is the same level that we were hitting just about one year ago. Let me put a max chart up here. And by the way, I hear a lot of great things about from Sonos users. They seem to have a very fanatical user base, not unlike Peloton's--


JAFRED BLIKRE: --people who love it. Yeah. I haven't tried it myself. I heard it's difficult-- if you configure it in your house, very difficult to move. But here we're looking at a max chart. This goes back to their 2018 IPO. This is just a big consolidation movement. But what I don't really like about this is it keeps breaking these potential support lines. So we're in a medium term downtrend in the stock. Not going to comment on the fundamentals here or their patent dispute with Google, but on the longer term, you can still see sitting on some decent games here. This was a great stock to own in 2020. We got a liftoff in early 2021. And like a lot of those highfalutin stocks, it just kind of fell off there.

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