GameSquare acquires rare CryptoPunk NFT from DeFi pioneer for $5.15m

FRISCO, Texas - GameSquare Holdings, Inc. (NASDAQ:GAME), a $126.5 million market cap company with rapidly growing revenues of $99.58 million, has purchased a rare "Cowboy Ape" CryptoPunk NFT from Robert Leshner, founder of DeFi protocol Compound, for $5.15 million in preferred stock convertible to approximately 3.4 million common shares at $1.50 per share. According to InvestingPro analysis, the company’s stock currently appears fairly valued based on its comprehensive Fair Value model.

The acquisition represents GameSquare’s first direct NFT investment and forms part of the company’s blockchain treasury strategy that targets 6-10% annualized stablecoin returns. While the company has shown impressive revenue growth of 77.06% over the last twelve months, InvestingPro data reveals several key challenges, including weak gross profit margins of 15.28% and concerning cash burn rates. Subscribers to InvestingPro can access 12 additional crucial ProTips about GameSquare’s financial health and future prospects.

"This relationship demonstrates the unique, forward-thinking strategy we have developed to expand into the fastest growing edges of onchain finance," said Justin Kenna, CEO of GameSquare, in a press release statement.

The purchased CryptoPunk is one of only 24 Ape CryptoPunks in existence. GameSquare plans to leverage the digital asset for marketing activations, community building, and potential licensing opportunities.

The company also announced it recently purchased $10 million worth of Ethereum (approximately 2,742.75 ETH) at a weighted average price of about $3,646 per ETH. This brings GameSquare’s total Ethereum holdings to approximately 12,913.49 ETH, valued at over $52 million. With a current ratio of 0.57, indicating potential liquidity challenges, these significant crypto investments warrant careful monitoring. Detailed analysis of GameSquare’s financial health and investment strategy is available in the comprehensive Pro Research Report on InvestingPro.

GameSquare’s NFT yield program is being managed by Ryan Zurrer’s 1OF1 AG, which will custody the asset for yield generation purposes. The company’s ETH-focused yield strategy is built on Dialectic’s Medici platform, targeting onchain yields of 8-14%.

GameSquare describes itself as a media, entertainment, and technology company focused on connecting brands with younger audiences through its platform, which includes creative services, analytics, and ownership of gaming organization FaZe Clan.

The company has authorized up to $250 million for its crypto treasury management strategy, of which $45 million has been used for ETH purchases to date.

In other recent news, GameSquare Holdings, Inc. has made several strategic financial moves. The company expanded its digital asset treasury management authorization from $100 million to $250 million, acquiring approximately $30 million of Ethereum, which brings its total holdings to around $38 million. Furthermore, GameSquare announced a $70 million public offering of 46,666,667 shares at $1.50 per share, aiming to boost its Ethereum holdings. The offering includes an overallotment option that could increase the total to approximately $80.5 million.

This public offering, however, led to a 16% drop in GameSquare’s stock during after-hours trading, with Lucid Capital Markets as the sole book-running manager. The company emphasized that the offering is subject to market conditions, with no guarantees on its completion or terms. Additionally, GameSquare plans to implement a proprietary Ethereum yield strategy targeting on-chain yields of 8-14% through Dialectic AG’s Medici platform. This strategy could potentially generate over $10 million in incremental annual profitability once fully implemented.

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