The easiest way to think of non-fungible tokens, or NFTs, is as “digital art.” NFTs take an image or piece of artwork and create a digital version of it that uses blockchain technology to give it a unique identification code. Blockchain is the same underlying technology that cryptocurrencies like Bitcoin are based on. Many people refer to NFTs as “cryptographic assets.” And while all this may sound too high-tech for many readers, NFTs have proven to be extremely popular and valuable.
One NFT by digital artist Mike Winkelmann called “Beeple” sold in a JPG file at an online auction for $69.3 million. Jack Dorsey, the founder of Twitter, sold the first ever Tweet as an NFT for $2.9 million and donated the proceeds to charity. Love it or hate it, it looks like NFTs are growing in popularity.
And as they rake in millions of dollars, we look at four NFT-related companies that are potential goldmines.
NFTs: Funko (FNKO)
Founded in 2017, Funko is one of the world’s biggest creators of licensed pop culture products. It designs and distributes collectable items ranging from action figures to plush stuffed animals. The company says that it supports people’s “fandom” in whatever form it takes. Funko currently has licensing deals in place with several popular brands that include Marvel superheroes, Star Wars, Harry Potter and the National Football League.
Now, Funko is moving into non-fungible tokens by taking a majority ownership stake in TokenWave, the developer of “TokenHead,” a mobile app and website for showcasing and tracking NFT holdings.
Funko is planning to develop NFTs of its popular licensed characters and brands and showcase them on TokenHead. Whether Funko is successful with this new NFT venture remains to be seen. But the move has helped the company’s stock. Year-to-date, FNKO stock has almost doubled in price, rising to $20.55 a share from $10.38.
Liquid Media (YVR)
Next up is Vancouver, Canada-based Liquid Media. Until this year, Liquid Media was a relatively small video game producer best known for creating the semi-popular mobile game called “Ancient Aliens.” But now, the company is pushing into non-fungible tokens in a big way. Liquid Media is planning to introduce in May a new project called “Red Carpet NFTs.” The plan is to make NFTs of popular Hollywood actors past and present, as well as classic and successful movies.
Liquid Media is betting that there will be a collectable market for NFTs tied to Hollywood. Think digital versions of classic movie posters and actors posing on the red carpet at movie premiers.
While this sounds like a plausible idea, the execution and marketing of Red Carpet NFTs will have to be flawless to help lift the company’s stock higher. YVR stock is currently trading at $2.46 a share and is in penny stock territory. Year-to-date, the share price has risen 45%, with much of the gain coming after the Red Carpet NFT project was announced.
Jiayin Group (JFIN)
Of course, Chins is not going to be left out of the NFT party. And one of the country’s leading NFT-related companies is Shanghai, China-based Jiayin Group. The company is a fintech platform that connects investors with borrowers. Jiayin says it operates a safe and secure platform that facilitates transparent, secure and fast connections between investors looking to lend money and people who need to borrow some.
Jiayin announced recently that it is purchasing a 95% equity stake in China’s Bweenet Network Technology Company, which designs microchips used in cryptocurrency mining. Speculation is that Jiayin plans to use Bweenet Network Technology Company not to mine Bitcoin but to utilize the underlying blockchain technology to create future non-fungible tokens. Jiayin has been cagey regarding its exact plans, but it is clear that the company is moving into the world of crypto. JFIN stock has also almost doubled this year, climbing to $6.06 a share from $3.05 back in January.
NFTs: WISeKey (WKEY)
Like all things tied to blockchain, security is important when it comes to non-fungible tokens. And Swiss company WISeKey specializes in online and digital security, including for NFTs. Originally a standard cybersecurity company, WISeKey is now aggressively moving into the security of NFTs. Earlier this year, the company released its own NFTs that included its proprietary security protocols installed to protect digital collectables. The results were, by most accounts, successful and left people impressed.
Moving forward, WISeKey says it wants to expand its security protocols to digital wallets and other forms of securing and holding cryptocurrencies and digital assets such as NFTs. This is a business that will grow with the NFT market, and as the value of NFTs rises. People who pay millions of dollars for a single NFT will, obviously, want to protect it with security measures.
This is all positive for WISeKey and its stock. Year-to-date, WKEY stock is up 15% to $8.13 a share.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.