NFT Stocks Have A Blockchain Moment: March 2021

stock chart first steady then going up and to the right

Another NFT Entrepreneur Newsletter by Clyde F. Smith

Prelude:

This special report on NFT Stocks is a deep dive much like the NFT Media Landscape Report.

I don’t intend ongoing coverage of NFT Stocks but this is a great moment to take a closer look. And it was actually rather fun, despite being a lot of work, so maybe there will be more!

I will continue with regular NFT Funding reports and plan to do the same with NFT Marketing and Merchandise.

Elsewhere, my most recent piece for The Defiant focuses on NFT Marketing:
Successful NFT Marketing Combines Cultural Awareness With Established Skill Sets

Thanks for reading!

NFT Stocks Have A Blockchain Moment Regardless Of Actual Company Interest In NFTs

When I say NFT stocks are having a blockchain moment, I’m thinking of Long Island Iced Tea changing their name to Long Blockchain Corp and its stock rising 200%. Now NFT stocks are having a similar moment with rumors and speculation leading to short terms leaps and collapses of a variety of otherwise unremarkable stocks. But with a new industry sector being born, NFT stocks are worth considering and a handful look quite strong.

The Long Island Iced Tea company story is relevant for a couple of reasons. At that point it was a microcap stock as are many of the so-called NFT stocks. I say so-called because a lot of the most hyped stocks have little to no exposure to actual NFT-related activity. In Long Blockchain’s case the plan was to continue making beverages while it shifted its “primary corporate focus towards the exploration of and investment in opportunities that leverage the benefits of blockchain technology.

Ultimately those plans didn’t pan out, the company stopped filing annual and quarterly reports and it was recently delisted by the SEC. I don’t know whether there’s more to the story worth considering but, as a microcap, it was pretty easy for the stock to get pumped and that seems to be the case for some of these NFT stocks.

Nevertheless, I like the phrase NFT stocks but keep in mind that it can mean anything from a major initiative, such as we’re seeing from Atari, to being seen as having potential to get into NFTs based on social media speculation. NFT stocks also include uses beyond my digital art and media focus, such as ticketing, but there’s so much news I managed to avoid moving beyond my area of expertise, thank goodness!

For this report, I’ll divide NFT stocks into four groups. First, companies that are actually embarking upon NFT-related initiatives. Second, companies that are testing the waters and making big plans. Third, companies that are claiming to be checking out NFTs or are being described as having potential to become involved in the sector cause, yes, they’ve heard of NFTs. And, fourth, companies that fall under the heading “So you’re telling me there’s a chance?” with absolutely no connection or stated interest in NFTs.

Honestly, the last two are the most fun and the least relevant to most investors except for those hoping to join in some pump and dump action given widespread confusion over what it might mean to be an NFT stock.

As The Wall Street Journal notes, 2021 has been a time of great risk taking for all sorts of investors and that includes those investing directly in NFTs. NFT stocks obviously took advantage of this situation with a lot of activity occurring in response to mainstream media’s broad-based coverage of NFTs that took off seriously in February. So the time was definitely right for stocks to rise even if only because a C-Level executive expressed awareness of their existence.

Note: Market Caps are from March 31 and April 1 and are more for a general benchmark as of this week.

We’re Active in NFT Land!

Funko, Inc. (FNKO)
Nasdaq, Market Cap 1.044B

Funko, a toy making company working with such brands as Harry Potter and Star Wars, was doing well long before NFT speculation kicked in. Its stock has been steadily rising for the last year and it currently has the largest market cap of any of the rest of the stocks in this report.

Funko entered the “We’ve Got Big Plans” category in early March when discussing the company’s solid annual growth. Responding to a question about NFTs, CEO Brian Mariotti pointed out the strengths of Funko’s capabilities as indicative of what it can do in the space:

“We’re excited about it. And we have a plan in place. We have some technology in place. We are going to be out in the market fairly soon. But we’re going to be out in the market in a very different way. We have the ability to disrupt this space in a way that nobody else is doing right now. We can tie digital NFTs to our fan base and link entities with physical products…”

“And we’re really excited about what the future of NFTs are. We’re certainly all over this, and I think you’ll see something fairly soon from Funko in the market.”

Funko then officially entered the NFT space with acquisition of a majority stake in TokenWave which has both the TokenHead “cryptocurrency and NFT tracking app” focused on the WAX blockchain as well as an NFT Studio that provides NFT services to brands.

With Topps having led the way in proving the viability of pop culture brands on WAX, Funko and TokenWave seem likely to be making big moves in the days ahead. In the press release CEO Mariotti is actually quoted saying something real:

“The marriage of digital and physical using WAX’s patented NFT technology known as vIRLs™ is powerful…Our ability to combine Funko Pop! digital NFTs with exclusive Funko Pop! Vinyl Figures has the potential to be a game changer. By backing the rarest of the Funko NFTs with exclusive redeemable Funko Pop!s, we are poised to enter the NFT market in a very unique manner.”

“Importantly, we plan to make Funko NFTs broadly accessible to our fans by providing affordable entry pricing. Utilizing WAX Blockchain technology, we have the opportunity to eventually bring Funko collectible NFTs to our millions of fans around the globe. The NFT world is all about content, and Funko has been connecting fans to the content they love for over 20 years.”

Funko could be the big NFT stock play if you’re interested in companies doing real things and making real money.

Atari SA (PONGF)
OOTC, Market Cap 246.447M

Atari’s stock has essentially doubled due to NFT excitement. It has actual news plus, as a gaming company, is already in a sector for which NFTs have shown great promise.

In early March it announced a partnership with Decentral games to create a casino on the Ethereum blockchain that would include both games and NFTs. They followed with plans to create a gaming platform, Atari Metaverse, in partnership with Bondly. Bondly seems like a solid choice given their experience with NFTs. Note there is also a cryptocurrency play with Atari’s $ATRI and Bondly’s $BONDLY.

Last week Atari announced Chain Games commitment to what now seems to be called the Atari Multiverse. Atari also explored art released in NFT marketplaces a bit in late 2020 and continues to do so.

Though there was a pullback from the March 22nd closing, causing Bloomberg to question the comeback, the stock seemed to settle and has since reached that peak again. While the announcement of plans for $ATRI in February 2018 did push the stock up to similar heights, it dipped quite low after that point. However, with the launch of the Multiverse, $ATRI has a real use case related to Atari’s business.

At this point Atari appears to be a serious contender with NFT and metaverse developments offering it a new chapter.

Hall of Fame Resort & Entertainment Company (HOFV)
Nasdaq, Market Cap 410.593M

Hall of Fame Resort & Entertainment Company had some positive movement before essentially doubling in late March and then pulling back to a still healthy point by the end of the month. The run began with Twitter speculation, which is a recurring theme for NFT stocks, that Hall of Fame was a good NFT candidate because it has a solid relationship with the NFL and the NFL is interested in NFTs. Hall of Fame had no history of NFT interest at this point.

Then Hall of Fame announced a deal with Dolphin Entertainment (Nasdaq:DLPN) to offer NFL highlight NFTs. Apparently there is some NFL ownership of Hall of Fame stock via the Pro Football Hall of Fame but the Hall of Fame Resort & Entertainment Company itself has some sort of rights around NFL-related content, such as the Heisman 2 Hall, so this isn’t whatever the NFL’s big deal will be.

Hall of Fame CEO Mike Crawford spoke with Benzinga and made it clear it has legit plans and content but is still a “Sports & Entertainment Company And NFTs Have Become Apart Of Our Business.”

The article is full of great bullet points if you’re interested in this play. It clarifies that the relationship with Dolphin Entertainment connects it to artists and that Dolphin’s currently working on NFL content for Hall of Fame’s NFTs.

He describes a “Robust Pipeline Of Archives, Memorabilia…That Can Be Transformed Into NFTs.”

He also clarified that the upcoming Hall Of Fantasy League, a fantasy football league that it wants to tie into gambling platforms will not be a crypto or NFT play. Apparently it’s hoping Ohio will legalize sports betting and this would be its play in that area as well.

However that turns out it seems likely that the fantasy league might provide another marketing channel for its NFTs so this actually seems like a potentially strong play for both NFTs and digital sports.

Dolphin Entertainment, Inc. (DLPN)
Nasdaq, Market Cap 87.909M

Since Dolphin Entertainment wasn’t rumored to be getting into NFTs, its announcement that it was forming an NFT division almost tripled its stock price. The next day’s announcement that it was partnering with Hall of Fame Resort & Entertainment Company almost doubled that price. It has since pulled back but has maintained most of that initial jump.

At least one analyst thinks Dolphin is in a strong position since it has sorted out some financial issues and “the company already provides marketing and publicity services for the media and hospitality industries. Additionally, it offers branding and production capabilities as well as social media and influencer marketing services.”

Given its initial announcement mentioned “several upcoming projects and partnerships” there may be some interesting movement off announcements to come depending on how strong those projects and partnerships appear to be.

Liquid Media Group Ltd. (YVR)
Nasdaq, Market Cap 46.233M

Liquid Media Group is an interesting NFT stock partly because it began as a speculative play due to a video on demand distribution deal signed with Atari after Atari had announced NFT related deals. It had no history of involvement with NFTs to that point.

It then entered the “We’ve Heard of NFTs” category due to an interview that followed the close of a $6 million direct stock offering and discussion of its “end-to-end solution [that] targets independent content creators to package, finance, deliver and monetize their video IP globally.”

In this interview CEO Ron Thomson stated that he was aware of NFTs and that Liquid Media was “very much looking forward to learning more about NFTs and finding a way that we can incorporate those into our business model going forward.”

It then tied together “We’ve Got Big Plans” with “We’re Active in NFT Land” when it announced a deal with Currencyworks (OTCMKTS:CWRK) to launch a platform allowing intellectual property owners to create NFTs, create utility tokens for subscriptions, use Security Token Offerings for funding and manage copyright, licensing and royalties for NFTs.

This is a pretty big crypto and NFT play offering services to a customer base with which it already has strong relationships. But that’s also a big chunk of work and depends on CurrencyWorks being able to handle the job.

So after a ten day period in which its stock more than tripled, Liquid Media still looks pretty strong and is worth considering based on the power of future announcements and, you know, actual results.

CurrencyWorks Inc. (CWRK)
OOTC, Market Cap 126.46M

CurrencyWorks has a lot of experience in the blockchain/crypto/big brand partnering space so that’s a good look for Liquid Media Group. Its claim to fame is bringing Topps’ Garbage Pail Kids NFTs to the WAX blockchain. It has an NFT platform that seems to be focused on WAX. Honestly, past coverage of CurrencyWorks is a bit weak and I’m having trouble sorting out its history in relationship to stock movements.

It seems to be getting investor attention mainly for the Liquid Media Group deal and for announcements of stuff it had already announced and then announced again like taking BTC and ETH as payments on its NFT platform. Sometime earlier in February it caught the NFT fever wave and I honestly think it’s been held back because it has done a lot of work in the space so there’s not a lot of room for speculation.

In any case, it’s in play now because of Liquid Media and is worth giving a deeper look. CurrencyWorks might just need a better publicist.

We’ve Got Big Plans!

PLBY Group, Inc. (PLBY)
Nasdaq, Market Cap 612.495M

Playboy recently returned to public markets via a SPAC and so CEO Ben Kohn is talking up the possibilities of new merchandise and what can be done with its treasure trove of content.

Kohn recently discussed the potential for NFTs and said the company turned down a content licensing opportunity back in October. Some analysts raised price targets in response to the news and Kohn has continued to discuss the possibility.

As Chief Brand Office Rachel Webber stated:

“We are sitting on almost 70 years of the most incredible and iconic art and photography. We are actively working on our non-fungible tokens or NFT, and digital collectible strategy to enter the space in a thoughtful way, designed for long-term growth.”

Playboy’s got content. Playboy can create NFTs.

It will be interesting to see how it turns its content into NFTs. So far photographs have not been a strong contender in NFT markets but cryptoart featuring altered photographs and erotic images have found collectors. A big question here is how NFT markets will respond to a fairly old-fashioned brand which may not be viewed that nostalgically by NFT collectors.

Playboy has been losing money with much of its revenue derived from licensing deals. However, what would happen if it teamed up with top cryptoartists to make entirely new artworks from its content? Certain centerfolds and covers might also do well so maybe they can pull it off. We’ll see.

ClickStream Corporation (CLIS)
OOTC, 1.117M

ClickStream is a small company that hit its highest point since 2016 on a non-NFT announcement regarding its communication app HeyPal in February.

The company recently announced acquisition of Rebel Blockchain Inc., creators of the still-to-launch Nifter music NFT marketplace. That gave it an additional temporary boost on an otherwise downward trajectory.

Nifter has a nicely designed indie music NFT platform landing page but the site currently states “Coming Soon”, its social media presence is next to nonexistent and there doesn’t seem to be an option to sign up for a launch announcement.

Categorizing this as “We’ve Got Big Plans [Plus a Landing Page]!”

Cinedigm Corp. (CIDM)
Nasdaq, Market Cap 262.207M

Film and tv content producer Cinedigm Corp. is interesting cause somewhat random speculation first hit that it might be an NFT play. The speculation was said to be due to Wizard World getting into NFTs and it has a minority stake in Cinedigm. Ok, I get it. People are scouring the possibilities so they can speculate on possible NFT plays and finding these kinds of connections.

But it’s weird how some companies get this random social media speculation followed closely by an actual announcement, in this case of the big plans variety, as if it’s all mapped out in advance. Normally if something leaks, you get a leak about doing something specific. So these aren’t technically leaks.

It just so happens that more than one company that is getting social media attention due to a random connection to NFTs is suddenly announcing entry into the NFT space in an unrelated way leading to a stock surge based on the news immediately after a previous stock surge based on random speculation fueled by social media.

Nothing odd about that!?!

We’ve Heard of NFTs!

CLPS Incorporation (CLPS)
Nasdaq, Market Cap 96.452M

CLPS was apparently touted on Twitter as a potential NFT stock though the mania seems to have been short-lived.

“Since NFTs are pretty new, further studies need to be done to ensure it aligns with our competitive advantage and strategy,” a company spokesperson told Benzinga Monday morning.

The company said it will keep the public informed if NFTs will be “integrated in our R&D trajectory.”

“So you’re telling me there’s a chance?”

Takung Art (TKAT) is an interesting company with a focus on fractional ownership of Asian art and collectibles. It has a strong online business but no history related to NFTs and, as far as I can tell, no stated interest in NFTs. Nevertheless it “gained about 950% in almost two weeks” off social media speculation!

Takung is an awesome example of how high stocks can surge when they’re not weighed down by reality.

Here’s a great NFT Penny Stock post about stocks being chatted up solely on planning to do things that might put them in a space where they could conceivably then decide to get into NFTs. And similar very thin threads.

Here’s an excellent list of stocks being discussed on social media as possible NFT plays most of which have “no direct connection to NFTs (or ‘non-fungible token’ has never been mentioned by company exec in print).”

Square Buys Tidal, No NFT Tie-in Announced But Jack’s Selling A Tweet!

Social media users are hoping for NFT news from BBIG [even though there’s no related company news].

And, hey, “as long [as] Bitcoin keeps rising, NFTs are here to stay[!]”

In Closing

The above look at NFT stocks does not exhaust news in the category, even given my focus on digital art and media. Of course, none of the above is investment advice but I do hope it gives readers some things to consider if you’re making such decisions.

To be honest, like the moves made in NFT marketing, a lot of what is happening with NFT stocks isn’t that different from other tech boom periods. The basic skills stock investors have developed for such periods remain in effect with a new tech darling in play. However, as in previous times, understanding what you’re looking at will help keep you from being blindsided by reality when pr maneuvers collapse.

Obviously social media is playing an ever bigger role in stock pumping and that creates some dangers. In fact, there have been some examples already of social media speculation raising stock prices with an actual announcement following a few days later. Which makes me wonder if there’s some insider-related trading happening via tip-offs to traders that are using social media speculation to cover their tracks.

At the same time, with bigger brands getting into NFT Land, there will be some market moving news based on actual substance. Which means there is a strong likelihood that well-situated NFT companies, however newly minted, may have additional dramatic price rises creating profit-taking opportunities.

So stay nimble and DYOR!

NFT Entrepreneur