I read a statistic on Morning Brew at the start of the week that suggests GameStop (NYSE:GME) no longer has the safety net the shorts once provided. So, now it’s up to activist investor and GameStop Chairman Ryan Cohen’s grand plan to get shares back to $200 or higher.

What’s Cohen’s grand plan? We know part of it involves non-fungible tokens (NFTs). Beyond that, it’s shrouded in mystery. 

For GME shareholders, I believe 2022 will be the year they either breathe a sigh of relief because their instincts about Cohen were right — and he’s proven to be a brilliant e-commerce operator and turnaround artist — or they are wrong and the emperor wears no clothes.  

I continue to believe it’s the latter. 

GME Stock Jumps on NFT News

On Jan. 6, The Wall Street Journal reported GameStop was creating a marketplace for NFTs. The next day, GME stock shot up as much as 22%, hitting a high of $160.31, before closing the day with a respectable 7.3% gain. The NFT news was a major shot of adrenalin for GameStop bulls, who had witnessed a fast-and-furious drop since November. 

Naturally, when pressed by media outlets for comment, GameStop was mum about its plans. However, given the mystery treatment it’s chosen for its shareholders, GameStop’s handling of the NFT news is par for the course.

Cohen will not tell you his strategy until he’s thrown enough experiments at the wall and some of them stick. I can assure you that transparency won’t be a part of the game plan until then.

What Makes GameStop’s NFT Move Special?

Lots of companies are using NFTs to market their products. For example, I recently discussed the NFTs Fisker (NYSE:FSR) auctioned off of founder Henrik Fisker’s hand-drawn sketches. While it didn’t garner a ton of traction, it’s a sign of things to come. 

Once upon a time, the T-shirt was branded advertising. I remember going to Fort Lauderdale for spring break and coming home with free T-shirts from all kinds of companies promoting their brands. The NFT is the new T-shirt. 

So, I understand Nike (NYSE:NKE) buying a digital sneaker company. It wants to go where its customers are, not where they’ve been. “This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture,” Nike Chief Executive Officer John Donahoe said in a statement.

At the end of January 2021, GameStop had 47.1 million members of its PowerUp Rewards loyalty program. Of those, 15.2 million had purchased or traded a product at GameStop in the previous year. And 4.4 million were paying members, who get exclusive video game-related rewards. 

One should assume the company is explicitly targeting those 4.4 million paying members. They’re next-level gaming enthusiasts. It’s demographics 101. However, that doesn’t mean they’re going to jump at the chance to pay money to decorate or skin their players, weapons, etc.  

The Verge’s Jon Porter had this to say:

[S]o far much of the response from gamers to in-game NFTs has been downright hostile, with many seeing them as being of little value to the overall gameplay experience, and representing a marketing exercise by companies that have for years been happy to sell virtual items without the need for blockchain technology.

While I don’t doubt NFTs are going to be big, I think it’s a little simplistic to think your core audience will jump all over the GameStop NFT marketplace just because they bought a video game from you at some point over the past year. 

The Bottom Line on GME Stock

Getting back to the Morning Brew article I referenced at the beginning of this piece, Boston College finance professor Ronnie Sadka noted that short interest in GME stock has plummeted from 140% in January 2021 to around 10%. Thus, the possibility of a short squeeze has been removed. 

Now the only thing that can save GME stock from falling below $100 is a home run from Cohen. The falling short interest might suggest hedge funds believe he’ll be successful. Or it might just mean they’ve moved on to other shorts. I think it’s the latter. 

Cohen has to thread a very fine needle to revive GameStop’s business. It’s not going to be as easy as supporters think. Plenty of whales — Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) come to mind — are going to be jumping in and crowding the NFT market over the next 12-24 months. 

As I’ve said before, I don’t see this ending well. 

On the date of publication, Will Ashworth 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.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.