Recommended NFT Stocks to Buy and Why They are Worth It
The five NFT stocks I’m highlighting are up an average 151% in the last 12 months and exploding 80% higher over the last few months…but should you invest? In this video, I’ll show you the legitimate NFT stocks, the research behind this theme and why some stocks are a money-losing trap at best. We’re talking NFT stocks, today on Let’s Talk Money!
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NFT Stocks are THE Hot Trend This Year
Nation, NFTs or non-fungible tokens are THE hot trend this year with the market cap of NFTs booming 139% over the last 12 months and booking nearly 200% annualized growth since 2018. And that momentum is only increasing with the market cap up another 28% to $432 million just in the first three months of this year.
The $70 million auction of Beeple’s Everyday’s artwork has set off a wave of investment that could top SPACs and even bitcoin’s recent rise.
But like any hot trend, there are just as many risks so in this video; I want to explain the NFT stocks craze, I’ll show you how NFTs work and then reveal five NFT stocks to watch. More importantly though, I’m also going to show you some examples of stock traps, stocks luring investors in on that NFT craze that will lose your money.
What are NFTs and How Do They Work?
NFTs or non-fungible tokens are data on the blockchain that represents anything from art to videos, music and even a single tweet. It’s an ownership of a unique piece of code. What’s unique is these are one-of-a-kind collectibles, just as rare as any piece of art but also with that mystique of the blockchain technology right now.
Understand that fungible means something that can be traded for an identical asset like a dollar or a bitcoin. You can trade your one bitcoin for another or for two halves and there’s no difference. Non-fungible then is that uniqueness like a work of art or a photo that is one of a kind.
As with a lot of gold rush trends, my favorite way to play NFTs is buying the picks and shovels companies, the stocks of companies that will benefit by creating the platforms and collecting fees on the NFT theme.
Now do understand, the growth we’ve seen here has already rocketed a lot of these stocks higher and you have to believe in the long-term growth of these companies because the share price is going to be extremely volatile. In fact, I wanted to make this video just as much to warn you about the stocks masquerading as NFT stocks just as much as to reveal those legit companies in the space.
There’s still money to be made in the NFT trend but avoiding some of the worst stocks will be worth just as much.
We’ll use Stockcard.io to start our NFT stocks list and I can go to the dashboard and check out these featured collections for some of the biggest themes in the market. We have an NFT stocks list here but as I usually do, I’m still going to use the search bar here.
Typing in NFT and the drop-down is showing me smaller categories like stocks in NFT collectibles, gaming, platforms and software…all in case I want to focus my search beyond that generalized NFT theme.
We’ll click on the overall group and we see 35 stocks that I can research further in the theme.
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5 NFT Stocks to Watch and Buy
Our first here, $152 million WiSeKey International, ticker WKEY, is one of the most directly related to that NFT theme.
WiSeKey is a global cybersecurity company enabling secure communications for users on the blockchain, AI or within Internet of Things technology. It’s recently launched WiSe.ART to digitally certify and authenticate NFTs as well as partnering with SUN-X to introduce the first climate change and sustainability NFT.
The company is also further along in sales and earnings versus some of the others in our list. WiseKey booked $18 million in sales last year though it reported a loss per share in earnings. It is balance sheet cash positive with $15 million in cash versus $10 million in debt so I’ll be watching how sales and earnings do this year.
Dolphin Entertainment, ticker DLPN, is one of the most popular NFT stocks; a $66 million entertainment marketing and production company that recently launched a new division dedicated to designing, releasing and promoting NFTs for its clients.
Dolphin owns several PR firms in movie, music and social media marketing and is partnering with Hall of Fame Entertainment Resort, ticker HOFV, to offer sports-related NFTs. Its entertainment PR firm, 42 West, represented seven of the last 15 best picture winners at the Oscars.
The company’s also cash positive with $12.5 million in balance sheet cash against $9.5 million in debt. It managed to keep revenue flat last year and is expecting a 32% increase to $32 million this year.
Very much a picks-and-shovels play here with Currencyworks, ticker CWRK, a platform designer for digital currencies and tokens.
Now you’ll notice that all these companies are extremely small, most even under $100 million market cap, and Currencyworks here at just $75 million market cap. That means you’ve not only got the risks around the NFT and tokenization theme but also around these smaller, penny stock companies so definitely do your research on management and financials with these.
Currencyworks announced in March that its NFT platform will expand to include bitcoin and Ethereum as payment methods. The company’s platform was used in the recent $100,000 sell-out for the Garbage Pail Kids NFT launch by the Topps card company.
The financials aren’t quite as strong here with a net debt balance sheet. The company booked $33,000 in cash against $1.5 million in debt last quarter and $190,000 in sales over the last year.
We’ve still got two more NFT stocks to highlight but I also want to talk a little about the stocks to avoid because I feel like it’s one of the biggest traps in the market right now. There are a handful of stocks like Cinedigm, ticker CIDM, Takung Art, ticker TKAT, and Funko, ticker FNKO, that have surged on the idea that the companies might adopt some kind of NFT business model. Here you see TKAT in red up over 1,100% this year on the idea that the art gallery might start selling NFTs.
Now that’s not to say that these three companies specifically won’t become NFT stocks but all three, and others in the market, have been surging and finding new investors on nothing more than the hope of a connection. Those are the kind of stocks you want to avoid because first you’re gambling that the company will adopt some kind of NFT-related business and second you still have to hope the whole NFT trend develops.
Instead, stick with the legitimate NFT stocks of companies with a clear connection on the theme.
That said, I do want to highlight Liquid Media Group, ticker YVR, as one of the few indirect plays I’m watching.
Liquid Media is a production studio that can package, finance, distribute and monetize developers’ video games. The company has a portfolio of 65 game titles and agreements with A&E Networks as well as Atari.
The distribution agreement with Atari puts its games on the new Atari hybrid console and now Atari has signed a separate agreement for gaming NFTs with Bondly, so there’s speculation that this connects Liquid Media with the potential for offering NFTs to its clients as well.
Even if the NFT idea doesn’t fully develop for Liquid Media though, I like the gaming space as one of those big themes over the next few years. ARK Invest estimates that global virtual gaming revenue could rise by an annualized 21% to $350 billion by 2025 as platforms monetize better.
Now Liquid Media has no revenue to speak of, booking just $40,000 in sales last year but it is cash neutral on the balance sheet.
Related to that but maybe a little stronger is Atari, ticker PONGF, and I gotta say I was surprised this is only a $228 million company.
I guess for us old-timers, Atari will always be Pong and Centipede but it’s just as much about leveraging the brand now than the games. A complete reboot of the company in 2013 has helped drive revenue growth of 16% annually over the last three years to $28 million and the launch of its new console, a PC/console mix system offers both gaming and entertainment.
The company is licensing into casino games and has expanded into digitization with the Atari Token for in-game purchases. The team-up with Bondly for gaming NFTs will put it squarely in this space and it’s also partnered with RTFKT Studio to launch a limited edition NFT Atari-themed fashion series.
Maybe it's partly nostalgia but I really like the breadth of strategy here and Atari is the only company in our list to remain profitable over the last year so it’s definitely the top on my list.
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