In 2021, NFTs gained a huge following and everyone was talking about them, from investors to collectors and everyone in between. Of course, there was a lot of chatter that it was all just a “bubble” that was going to burst any day.
But in 2021 alone, NFT sales were a staggering $27 billion. As impressive as that is, this meteoric rise shows no signs of slowing down: on January 2nd of 2022, OpenSea recorded more than $243 million worth of trading volume on the Ethereum blockchain alone
Far from being a “flash in the pan”, NFTs are here to stay. It’s a growing market with a lot of exciting opportunities, so people are wondering how to start investing in them. One way is to start buying NFT stocks, meaning that you’re buying shares from companies that are producing NFTs or are somehow related to the NFT space.
In this post, we’ll define “NFT stocks”, talk a little about investment strategy, and then discuss the most promising NFT stocks in 2022.
What Are NFT Stocks?
First of all, let’s just take a quick moment to review NFTs. Known as non-fungible tokens (NFTs), these are digital assets (sometimes called crypto assets) that are one-of-a-kind and unique. Plus, the authenticity of a given NFT can be verified via its metadata stored on the blockchain (like Ethereum or Bitcoin).
If you’d like a more thorough explanation of NFTs and the blockchain, make sure you check out our blog post What Are Music NFTs? It covers more than just music NFTs and gives you a great rundown of all the key technical concepts.
Unlike “regular” digital files, NFTs have value by being scarce, unique, and verifiably authentic. As a result, there is a rapidly growing and dynamic market for NFTs, potentially making them an exciting investment opportunity.
That being said, you can invest in NFTs in two ways:
- Buy the NFTs directly from an NFT Marketplace with the use of a crypto wallet.
- Buy NFT stocks from a company that’s making NFTs on a stock exchange.
In other words, “NFT stocks” is a bit of a misnomer, since NFTs are investment opportunities that are distinct from stocks or stock options. The most accurate way to describe “NFT stocks” would be to say something like NFT-related stocks.
RELATED ARTICLE: What Are The Best NFT Marketplaces In 2022?
Are NFT Stocks A Good Investment?
Yes, they absolutely can be! Like any other investment, it all depends on which NFT stocks you buy and – most importantly – when you decide to buy them.
The whole trick is to catch the NFT stock when it’s on the up and up, as it’s accruing value before it plateaus or hits its peak. Thankfully, the NFT space is super dynamic right now, so there’s plenty of money to be made.
There are NFTs that have generated huge returns for buyers – for instance, NFTs in the Bored Ape Yacht Club series were “minted” for $189 each and recently sold for $109,816. That’s a return of 58,118%. Clearly, the NFTs themselves can be amazing investments.
However, the market is red hot right now and not everyone wants to front the significant sums of money that it takes to buy some of these NFTs. That’s where NFT stocks can come in – they’re a less resource-intensive means to invest in the NFT space. It’s like that old saying: During a gold rush, sell shovels.
In this case, you’re buying stocks from companies that are somehow related to the NFT space, usually in the sense that they’re creating (or “minting”) NFTs themselves. Due to their involvement in NFTs, these companies are seeing their stock prices skyrocket, making them sound investments.
What I Should Look For In An NFT Stock?
If you’re looking to invest in NFT stocks, there are a few key things you should look out for:
- Company’s overall value. Choose NFT stocks from a company that’s healthy and valuable to give you greater returns in the long run.
- Time horizon. Decide if you want a stock investment that’s short, medium, or long term.
- Portfolio diversification. Use NFT stocks to diversify your portfolio and avoid “putting all your eggs in one basket”.
- Growth. If a company is growing – with positive revenue and earnings – then its stocks will also increase in value.
- Volatility. Find NFT stocks that are more stable and show consistent growth rather than erratic gains and losses.
- Price-to-earnings ratio (P/E). Find companies with a lower P/E – this means that they’re undervalued and you’re paying less for every dollar of earnings you receive.
- Price-to-sales ratio (P/S). A value between one and two is “good” while anything below one is considered “excellent”.
- Price-to-book-value ratio (P/B). Any value below one means that the company is undervalued, although investors may buy stocks with ratios below three.
- Innovation. Ask yourself if the company offering the NFT stock is bringing anything new to the NFT space and how it will change the market.
These are just a few of the key characteristics of a potentially profitable NFT stock. When investing in the market, it’s all about research, research, and research – get to know the company to understand precisely what they’re offering and how it will affect the NFT space.
A great resource is a company’s annual report, usually released in April of every year. You can find them on the company’s website and use them to make a more informed decision about your potential investment.
What Are The Best NFT Stocks?
Let’s take a look at some of the most exciting and promising NFT stocks for 2022 and – most importantly – why they’ll be so crucial in the upcoming year:
Founded in 2017, this Washington-based company sells licensed pop culture collectibles. With a market cap of $741 million, it’s particularly popular with younger buyers, both due to the highly collectible nature of their products and their recent forays into the NFT space.
In April of 2021, Funko acquired a majority stake in TokenWave, a website and app for tracking NFTs. Plus, the company has launched its own line of NFTs called Funko Digital Pop! These are exactly the kinds of NFTs that sell like hotcakes: fun, cheeky, and highly collectible. So it’s no surprise that they’ve been a huge hit.
Additionally, mainstream investors have taken notice of this company’s bright future; on May 13, 2021, Bank of America raised the price target on Funko stock from $12 to $30, upgrading the rating from Underperform to Buy. This definitely makes it the kind of NFT stock that’ll be a solid investment.
Currently, Funko offers its NFT holdings on the WAX blockchain, making all NFT purchases easily verifiable.
Mattel is an absolute giant in the world of toys and collectibles, founded in 1945 and commanding a market cap of about $7.6 billion. Although they’re a “legacy” company, they’re 100% willing to stay innovative in a changing market, making them a promising NFT stock.
In 2021, Mattel moved into the NFT space with their Hot Wheels NFT Garage Series, offering NFT versions of their iconic Hot Wheels toy cars. This was a smart move since the physical versions of these toy cars are already highly collectible and have a huge secondary market for collectors.
Plus, Mattel offers other iconic toy collections, including Barbie dolls as well as Pixar and Star Wars figurines, all of which are prized by collectors. They also have licensing to sell Minecraft products, which are popular with online gamers and metaverse residents.
The real power play here would be for Mattel to offer Barbie NFTs – it’s pretty much guaranteed that they’ll be a big seller. Regular Barbie sales exhibited an extremely impressive 18% growth in Q4 n 2021 and 87% year-over-year. But once they start offering Barbie NFTs, this will easily become one of the most valuable NFT stocks on the market.
This California-based tech company offers a cloud computing platform with secure solutions as well as various business optimization tools. The company has exhibited some amazing growth: they posted over $430 million in revenue in 2020 and now have a market cap of $37 billion (which doubled since the start of the COVID-19 pandemic).
So what makes this such a promising NFT stock? In April 2021, they announced that their video sharing platform Cloudflare Stream now supports NFTs. In other words, content creators and developers can embed NFTs in their videos. This optimizes the efficiency of delivering the videos online while simultaneously strengthening ownership rights and reducing digital piracy.
It’s important to remember that the authenticity and provenance of an NFT can be tracked using the metadata on the blockchain. This means that now it’s easier to track the videos on Cloudflare Stream via the embedded NFTs. To put it simply, this is a much more efficient way to maintain copyright on uploaded content and will likely revolutionize the way people share their original content online. The possibilities are endless!
Twitter has – by far – the largest market cap of all the companies on this list: a staggering $31.58 billion. It’s already an ultra valuable and highly recognizable company, but their entry into the NFT space has been, by all accounts, a tremendous success.
In March of 2021, the CEO, Jack Dorsey, offered an NFT of the very first tweet ever posted. It sold for an amazing 1,630.58 Ether ($2.9 million). Additionally, the extensive media coverage of this sale was one of the primary catalysts for the NFT market expansion. For many people, this was the first time they had ever heard of NFTs.
Since then, Twitter has come up with some exciting developments. In September of 2021, they announced that they were working on an “NFT profile verification”. This means that a user can take any NFT from their crypto wallet and then use it as their avatar image. It will include a checkmark verifying the blockchain that the NFT is stored on – so, if it’s Ethereum, it’ll have an Ethereum checkmark.
By developing this kind of NFT avatar, it adds to the fun and “bragging rights” of buying and collecting NFTs. It’s kind of like a status symbol: Check out this NFT that I paid for. As a result, NFT enthusiasts, metaverse explorers, and investors are really excited for Twitter as an NFT stock in 2022.
DraftKings specializes in sports-related products as well as sports betting and fantasy leagues, all of which are huge moneymakers. In fact, the company has been performing incredibly: Q2 2021 revenue grew an amazing 297% and Q3 2021 revenue was nearly $213 million.
While this is all impressive, it really shines as an NFT stock because of its DraftKings Marketplace. This is an NFT marketplace that runs on the Ethereum Layer 2 blockchain and offers an incredible array of sports NFTS. These NFT offerings, known as “drops”, have been generating huge sums of money, getting snatched up as quickly as they can be released. When the Chicago Bulls dropped their first NFT collection, it sold out in 90 seconds!
Sports fans are a passionate and loyal bunch, making them natural collectors who love to buy, sell, and trade memorabilia in the secondary market. As a result, DraftKings developed these sports NFTs specifically for collectors, making them a lot like the original sports cards that people have collected for years.
As a marketplace, DraftKings makes it easy to exchange these NFTs while still maintaining their absolute scarcity, thereby retaining their high value. The huge buzz and hype surrounding DraftKing’s drops makes it highly likely that this’ll be an NFT stock that climbs higher and higher in 2022.
Nike is not directly offering any NFTs to be bought or sold online, so why are we talking about them as an NFT stock? Because they’ve developed a technology called CryptoKicks. In December of 2019, their official patent for this shoe blockchain technology was executed, making them an integral part of the NFT space moving forward.
With the CryptoKicks technology, Nike is effectively making it easier for collectors and shoe enthusiasts to tokenize exclusive shoes. Each pair will be linked to a 10-digit ID number and all tokens and transactions will be recorded on the Ethereum blockchain.
As you can see, Nike was pretty early to the NFT train. But the company knows that shoe collectors are pretty intense – they’ll pay thousands of dollars for a single pair of shoes. With CryptoKicks, they’ve made it easier than ever to buy, sell and/or trade ultra-exclusive and ultra-rare shoes for collectors and enthusiasts.
Invest In Music NFTs With The HUSL
Buying NFT stocks is not for everyone – some people love collecting the actual NFTs and the exclusivity and status that comes from owning them. Plus, some marketplaces are innovating in the NFT space and offering more than just collectibles; you can buy NFTs that are experiences or opportunities, both within the metaverse and IRL.
The HUSL is a music NFT marketplace on the Ethereum (ETH) blockchain with rare collectibles, once-in-a-lifetime experiences, and access to exclusive events. We want to connect musicians and their biggest fans in the growing metaverse. We’re able to do this via a basic “freemium” model that radically prioritizes the creators and their fans through transparency, diversification, and grassroots interactions.
We’re all about exclusivity, collectability, and community. But we also value NFT investors who are looking for exciting new opportunities in this new market, so we offer only the best NFTs that will accrue the most value.
To use the HUSL, you’ll need a crypto wallet that works with the Ethereum blockchain – a great choice is MetaMask, which is both very secure and user-friendly.
2022 will be a banner year for the marketplace and we’ll be adding a wide variety of new artists to our selection. Launch the HUSL app and get started today!