NFT mania has gripped investors in recent weeks
Investors looking at playing the non-fungible token (NFT) space have seen options balloon in recent weeks. Indeed, companies are jumping aboard the cryptocurrency and NFT crypto plays bandwagon like never before.
Some investors may never heard of these so-called non-fungible tokens. Indeed, they’re a new phenomenon, and it’s still a very nascent space.
Essentially, NFTs are the latest crypto that crazy investors are buying into. By creating a unique, non-replicable copy of an image or video (such as a painting, or a Lebron James dunk), investors can own the “master copy” of a highly sought-after collectible.
In other words, NFTs are the “new rich” version of the art collection “old money” collectors used to accumulate. That is, NFT investors are hoping so. I mean, if stock prices are to be believed, this could literally be the biggest thing since sliced bread.
Certainly, there’s real reason to be excited about this real world-use case for blockchain. Digital assets are becoming more prevalent today than ever before. Accordingly, for those so inclined to put some “funny money” into this trade, here are seven NFT plays that fit the bill:
- Takung Art (NYSEAMERICAN:TKAT)
- Jiayin Group (NASDAQ:JFIN)
- Oriental Culture Group (NASDAQ:OCG)
- Funko (NASDAQ:FNKO)
- Hall of Fame Resort & Entertainment (NASDAQ:HOFV)
- Cinedigm (NASDAQ:CIDM)
- WiseKey (NASDAQ:WKEY)
NFT Crypto Plays: Takung Art (TKAT)
One of the first companies to jump aboard the NFT train in a big way was Takung Art.
Takung is seemingly looking to pivot from offering high-end paintings, calligraphies, jewelry and other items on its online marketplace to NFTs. The company’s been rumored to be pursuing NFT capabilities on its existing platform.
Indeed, it appears that’s all investors needed to hear. Following the March 15 speculation around these rumors, shares of Takung absolutely skyrocketed. Investors in TKAT stock saw shares go from around the $4 level to as high as $74 per share a week later. Hey, a near-20-bagger in a week — not bad. However, since this spike, shares have settled down to the $34 level. I mean, that’s still nearly a 10-bagger, so who’s complaining.
Furthermore, it appears that in addition to these rumors, investors like Takung’s business model. The company has a unique approach to ownership of collectible items on its platform. Whether we’re talking about NFTs or physical collectibles, the company’s marketplace allows for shared ownership in fine Asian art. Indeed, going in on a $50 million painting (or NFT) sounds like a much better deal than going in alone.
For now, it appears investors are waiting for more concrete news before going all-in on this stock. That said, the NFT space is a rapidly growing one, so there’s likely to be a lot of FOMO trading in the coming weeks.
Jiayin Group (JFIN)
Another NFT-rumor play, Jiayin has shot significantly higher, in an eerily-similar fashion to its peer Takung of late. In fact, the stock price moves of these two companies are so similar, I had to chart them out and compare them to each other.
It appears, once again, that pure, good-old, speculative fever has hit retail investors again with this stock. The thing is, unlike Takung Art that operates in the collectibles space, Jiayin operates an online financial marketplace. The company essentially connects individual borrowers and investors in China.
However, while fintech is great, and other crypto verticals seem more likely, social media-driven retail investors have done what they do best and buy heavy on speculation.
Personally, this one is a head-scratcher for me. But hey, speculation seems to be an investor’s best friend these days.
Indeed, since the speculative fever hit, I’ve yet to see concrete evidence the company’s moving into this space. In other words, this could all simply be locker room gossip. For now, similar to Takung, investors are taking a “sell the news” (or, rather, sell the speculation) approach to this stock. Currently, JFIN stock is down nearly 75% from its peak as skepticism appears to be winning out over hysteria right now.
Oriental Culture Group (OCG)
Oriental Culture is a company with a similar business model to Takung. The Hong-Kong based company provides investors with “professional platforms for the trading of collectibles and commodities.” The company went public on the Nasdaq in December via a $20 million IPO. With what appears to be a reasonable war chest for IT infrastructure improvements, investors are betting NFTs could be on the horizon for this company.
Accordingly, OCG stock has become another speculative NFT play that retail investors have jumped on in full force of late.
A number of reports circulated mid-March indicating investors believed OCG stock could be on the move as an NFT play. Again, not much in the way of prompting was needed. The company’s share price skyrocketed from around $4 per share to the $26 level, before settling down around $8 today.
Investors appear to be content with owning shares in companies with or without official announcements they’re entering the NFT arena. Right now, a little rumor goes a long way in this speculative mania.
Accordingly, investors should trade such stocks carefully today. Yes, Oriental Culture could be the next big winner. But in the absence of news, this remains a highly-speculative, and therefore risky, play right now.
An intriguing NFT play right now is Funko. The maker of limited-edition figurines has certainly created quite the market for its collectibles. Indeed, absent the NFT craze, this was an interesting stock to begin with.
However, Funko appears to be a company with real intentions of entering the NFT space in a big way. On March 22, Funko’s CEO made an announcement that the company was actively looking to disrupt the collectibles market. The goal? To “tie digital NFTs to our fan base and link entities with physical products.” The company plans on utilizing its licensing agreements to create some unique and rare NFTs tied to rare collectibles.
Exponential rarity? Now that sounds intriguing to investors.
Given the fact the company’s been so open about its intentions, it’s no surprise FNKO stock is still trading around its post-announcement levels. This is a stock that has seen one of the most muted declines in recent days. Accordingly, Funko appears to be the horse many NFT investors are willing to bet on right now.
As previously mentioned, this is a company with an excellent business model that may have been undervalued to begin with. Accordingly, I think the NFT hype here is more real than with many of the other companies on this list.
That said, buying any company on NFT news right now has been proven to be a dangerous trade. We’ll see where this stock goes, but for now, I’m going to be watching from the sidelines.
Hall of Fame Resort & Entertainment (HOFV)
Many investors may already be aware of the success the NBA has had with its Top Shot NFT platform.
Accordingly, a ton of speculation has gone into figuring out which company could ultimately lead the charge in producing a similar product for the NFL. The NFL has reportedly been looking for a partner. Those hunting for the elusive partner have gone to social media to stake their bets.
Enter: Hall of Fame Resort & Entertainment.
Like its name, Hall of Fame is a company that’s got a business built around the, you guessed it, Hall of Fame (NFL). The company’s goal has been to create a destination paradise for NFL fans to visit, stay, and spend their money. In other words, the Disneyland for NFL enthusiasts.
Indeed, investor enthusiasm around this potential has taken this stock on a wild ride. Shares spiked, and then, predictably, fell alongside other NFT hopefuls. However, on Mar. 29, the company sent a tweet that sent shares skyrocketing once again. The company’s announcement was that March 30, would be the “The Day Fantasy Sports Changes Forever.”
Unfortunately, this tweet didn’t provide investors with the NFT news they were hoping for. Instead, the company unveiled its Hall of Fantasy League, a non-news event that was met with severe disappointment. Shares fell more than 20% the following day.
These moves show just how volatile these NFT stocks are today.
A digital entertainment company, Cinedigm has also joined the speculative fray in the NFT space.
Like some of the other companies on this list, how social media speculator came to the conclusion CIDM stock was an NFT play is beyond me.
However, as fellow InvestorPlace contributor William White pointed out in his recent piece, it’s a bit convoluted. In fact, the reach here is pretty impressive.
That said, the idea is that Cinedigm’s stake in CONtv, which is an over-the-top media service covering Comic-Con, links CIDM stock to the NFT space. Comic-Con-linked Wizard Brands (OTCMKTS:WIZD) announced they’d be launching NFTs. The NFTs would be created using “25 years of exclusive Wizard World (www.wizardworld.com) convention videos, recorded live interviews and memorabilia to create NFTs (Non-Fungible Tokens).” Presumably, Cinedigm is expected to play some role in this.
Again, I think the reach here is a bit too far. But then again, shareholders who have held onto CIDM stock are winning right now.
What the future holds, no one knows. However, for investors considering NFT plays, I’d highly recommend investing in companies with tangible ties over those the require a moderate to high level of speculation and imagination.
To cap off the list, we have WiseKey.
WiseKey is a crypto play to begin with, which is a good start.
The company got its start creating digital identity ecosystems using blockchain technology. The company creates products used in connected cars, smart cities, crypto tokens and anti-counterfeiting devices. These products appear to be well-positioned for growth in sectors with pretty impressive long-term catalysts.
That’s all great, but besides the crypto link, what does this have to do with NFTs?
Well, recently, WiseKey announced it was shifting its focus to the NFT space. Specifically, the company’s newfound focus is on providing what are essentially digital certificates of authenticity to blockchain transactions.
WiseKey has created digital identification tokens which allow investors to ensure what they’re buying is the real thing. As with physical art or highly-valuable collectibles, NFT forgery is likely to be a thing. Since this is such a nascent business, it’s hard to say how big of a problem this is today. Accordingly, investors seem eager to get ahead of the curve and pick the services play in this sector. I’m always up for a “picks and shovels” play in most sectors, so I get it.
Indeed, with any innovative product comes unique problems. WiseKey hopes to be the leader in providing solutions to problems which may not exist yet. And investors like that.
Note: This article originally appeared at InvestorPlace.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.