Some folks choose to invest in video-game retailer GameStop (NYSE:GME) for the short-squeeze potential. Others might take a position because they’re anticipating strong financial growth from GameStop. However, the best reason to hold GME stock for five years is that the company is going all-in on non-fungible tokens (NFTs) and the cryptocurrency market.
It’s mind-blowing to consider how much the financial markets have changed over the past few years. Cryptocurrency is now considered a viable investment among retail traders and even some institutional-level investors. Meanwhile, NFTs are popular among some open-minded traders and could fetch multi-bagger returns someday.
Meanwhile, GameStop is still struggling to impress cautious investors, even while it sparks exciting memories for some Reddit traders. Yet, as long as you’re taking a stake for the right reasons, a moderately sized position in GameStop could yield surprisingly robust returns.
Short Squeezes in GME Stock Are Short-Lived
Not long ago, InvestorPlace contributor Thomas Yeung suggested that a short squeeze in GME stock may be imminent. There’s certainly merit to Yeung’s argument, as he made compelling points about GameStop shares’ liquidity and free float.
For a five-year buy-and-hold position, however, relying on short squeezes isn’t necessarily an ideal strategy. That’s because, in the past, GameStop-targeted short squeezes haven’t lasted very long.
As you may recall, in early 2021, GME stock made a round trip from $10 to over $80 and back within two months’ time. This year, there was a brief pop-and-drop from the $20s to the $40s and back.
The point here is that riding short squeezes higher may be a viable strategy for short-term traders, but it’s not ideal for long-term investing. So, let’s see if there are other reasons to consider a five-year position in GameStop shares.
GameStop’s Forays into NFTs and Crypto Trading Are Notable
I hate to be the bearer of bad news, but GameStop’s financials don’t, by themselves, justify a five-year share position. Unfortunately, the company’s most recently released quarterly fiscal report indicates a year-over-year decline in net sales, as well as a widening net loss.
However, GME stock investors don’t have to rely on recently improving fundamentals, or on a sustained Reddit-fueled short squeeze. Instead, they can make a long-term bet on GameStop’s foray into a couple of intriguing, digitally focused financial fields.
The first is NFTs, which represent a future-facing venture into digital art and collectibles. As you may be aware, GameStop launched an NFT marketplace earlier this year. GameStop’s platform will reportedly “allow gamers, creators, collectors and other community members to buy, sell and trade NFTs.”
Furthermore, GameStop announced a partnership with cryptocurrency marketplace FTX (or more accurately, with FTX US). This collaboration will, hopefully, “introduce more GameStop customers to FTX’s community and its marketplaces for digital assets.” Along with that, GameStop promised to start carrying FTX-branded gift cards in some of its stores.
So, Where Will GameStop Stock Be in 5 Years?
If you’re confident in GameStop’s NFT marketplace and collab with FTX US, then a long-term position in GME stock makes perfect sense. Moreover, if those ventures are successful, the GameStop share price could easily reach $100 in five years’ time.
Thus, you don’t have to sit around and wait for another short squeeze. As long as your position size is reasonable and you have a long enough time horizon, feel free to hold a few GameStop shares and, as they say, let the games begin.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.