Blockchain technology is creating new opportunities in a variety of industries. It's even creating industries that never existed. That's the case with non-fungible tokens (NFTs). An NFT is a token created by the Non-Fungible Alliance that exists on a blockchain. In many cases, that is the Ethereum (CCC:ETH-USD) blockchain, but there are now several other blockchains that support NFTs
The key to understanding NFTs as an investment opportunity is the idea that it's a cryptographic token that represents something unique. The value of an NFT is based on basic supply and demand. The first example of an NFT was the one-of-a-kind digital cat sensations, the CryptoKitties. Only 10,000 digital images were created. But the entire market raked in $32 million for investors who collected, bred, or traded these tokens.
As exciting and as much potential as the NFT market holds, it's still in its infancy. And that means what it looks like tomorrow is evolving. The federal government recently announced its intention to put guardrails on cryptocurrency. That regulation will extend to Ethereum and other blockchains that support NFTs. That's why many stocks on this list have a stand-alone case for ownership outside of NFTs. However, as you'll see many are also penny stocks.
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- Mattel
- Funko
- Cinedigm
- Cloudflare
- Hall of Fame Resort & Entertainment
- Nike
- Liquid Media Group
#1 - Mattel (NASDAQ:MAT)
Mattel (NASDAQ:MAT) is the first of the NFT-related stocks we’re analyzing. The company is best known for its toys and consumer products. In 2021, Mattel announced it was creating a limited collection of NFTs. And this is likely just the beginning, particularly when you consider that Mattel owns the iconic Barbie and Hot Wheels brands.
Mattel reported earnings in April and beat on both revenue and earnings. This was a relief to investors who were concerned about soft demand amidst inflation and supply chain difficulties. The company acknowledged that supply chain issues still exist, but we're confident that it had systems in place to keep inventories high.
And although MAT stock is trading near the top of its 52-week range, analysts have recently boosted the company’s consensus price target which gives the stock about a 23% upside. At the time of this writing, MAT stock had a price-to-earnings (P/E) ratio of 9.11 which makes it slightly undervalued compared to the sector average.
About Mattel
Mattel, Inc, a toy and family entertainment company, designs, manufactures, and markets toys and consumer products in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company operates through North America, International, and American Girl segments. It offers dolls and accessories, as well as books, content, gaming, and lifestyle products for children under the Barbie, American Girl, Disney Princess and Disney Frozen, Monster High, and Polly Pocket brands; die-cast vehicles, tracks, playsets, and accessories for kids, adults, and collectors under the Hot Wheels, Hot Wheels Monster Trucks, Hot Wheels Mario Kart, Matchbox, and Cars brand names; and infant, toddler, and preschool products comprising content, toys, live events, and other consumer products under the Fisher-Price, Little People and Imaginext, and Thomas & Friends, and Power wheels brands.
Read More - Current Price
- $18.90
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $23.75 (25.7% Upside)
#2 - Funko (NASDAQ:FNKO)
Sticking with the toymaker things brings us to Funko (NASDAQ:FNKO). The company is known for its signature toys that feature enormous heads. Over the company’s 20-year history they have made Harry Potter, Marvel, and Disney editions. In the spirit of Toy Story 2 collectors have been willing to pay thousands of dollars for boxed Funko toys on the resale market.
So it’s not a leap to suggest that the company would draw attention to entering the NFT market as the company did in early 2021. Funko released its first NFT pack, Digital Pop, in August 2021. However, although the stock did get a brief lift, it’s been trading in a narrow range ever since. Nevertheless, the consensus price target gives FNKO stock an upside of over 20% and this looks like a smart play for patient investors who are trying to get into the early stages of the NFT market.
About Funko
Funko, Inc, a pop culture consumer products company, designs, sources, and distributes licensed pop culture products in the United States, Europe, and internationally. The company provides media and entertainment content, including movies, television (TV) shows, video games, music, and sports; figures, handbags, backpacks, wallets, apparel, accessories, plush products, homewares, and digital non-fungible tokens; and art prints and vinyl records, posters, soundtracks, toys, books, games, and other collectibles.
Read More - Current Price
- $10.17
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 2 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $13.83 (36.0% Upside)
#3 - Cinedigm (NASDAQ:CNVS)
This next NFT-related stock is a penny stock, but one that has an intriguing story for risk-tolerant investors. Cinedigm (NASDAQ:CIDM) distributes and aggregates independent movie, television, and other short-form content in the United States, Canada, and New Zealand.
As it relates to NFTs, the company is in the business of turning movies into NFTs. The company’s first foray into NFTs involved remastering two classic movies as a limited-edition bundle complete with new content. It’s too early to tell if this will present a new revenue stream for the company. However, when you consider that NFTs will have appeal to collectors, their ties to the movie industry may be compelling. That being said, it has to be stated that this is a small-cap penny stock. Nevertheless, the company does have a consensus buy rating even though it is not being covered by many analysts.
About Cineverse
Cineverse Corp. operates as a streaming technology and entertainment company. The company operates in two segments, Cinema Equipment, and Content and Entertainment. It owns and operates streaming channels, through its proprietary technology platform. The company also delivers curated content through subscription video on demand (SVOD), dedicated ad-supported (AVOD), and ad-supported streaming linear (FAST) channels, as well as social video streaming services and audio podcasts; operates OTT streaming entertainment channels; and offers monitoring, billing, collection, and verification services.
Read More - Current Price
- $2.57
- Consensus Rating
- Buy
- Ratings Breakdown
- 2 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $6.75 (162.6% Upside)
#4 - Cloudflare (NYSE:NET)
The next NFT-related stock on the list is Cloudflare (NYSE:NET). The company is known for its cybersecurity products and has been growing its portfolio and revenue particularly as it relates to cloud storage. However, through the company’s Cloudflare Stream product they are allowing creators to publish their videos online without concerns about things like video quality, device, and compatibility.
And, to allow them to claim ownership of their works and have control over how ownership is transferred, creators are looking to develop NFTs. Cloudflare Stream has an API that uses an ERC-721 token ID and contact address so every video is represented as an NFT.
NET stock is currently trading at the lower end of its 52-week range and has a consensus price target that points to a 60% upside for the stock. The company reports earnings in early May. A good report may send analyst's targets higher.
About Cloudflare
Cloudflare, Inc operates as a cloud services provider that delivers a range of services to businesses worldwide. The company provides an integrated cloud-based security solution to secure a range of combination of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and IoT devices; and website and application security products comprising web application firewall, bot management, distributed denial of service, API gateways, SSL/TLS encryption, script management, security center, and rate limiting products.
Read More - Current Price
- $92.75
- Consensus Rating
- Hold
- Ratings Breakdown
- 10 Buy Ratings, 12 Hold Ratings, 4 Sell Ratings.
- Consensus Price Target
- $92.88 (0.1% Upside)
#5 - Hall of Fame Resort & Entertainment (NASDAQ:HOFV)
Another penny stock on this list of NFT-related stocks is Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV). I’ve written about this company for MarketBeat on a couple of different occasions. As its name suggests, the company is building many of its facilities near the Pro Football Hall of Fame.
The two organizations are separate entities, but they do share a common vision. That’s why I’ve referred to it as a picks and shovel play on the National Football League (NFL). And that’s what gets the company into the NFT discussion.
In 2021, HOFV entered into a partnership with Dolphin Entertainment. The companies are collaborating on Playbook – an NFT collectible series that will highlight significant moments in the careers of six well-known athletes.
In addition to asset creation, Hall of Fame Resort & Entertainment is involved in media and gaming including sports betting. The long-term plan is that this company will begin to generate revenue from every vertical which will propel this small-cap stock higher.
About Hall of Fame Resort & Entertainment
Hall of Fame Resort & Entertainment Company, a resort and entertainment company, doing business as the Pro Football Hall of Fame. It owns the DoubleTree by Hilton located in downtown Canton, and the Hall of Fame Village, which is a multi-use sports, entertainment, and media destination. The company is headquartered in Canton, Ohio.
Read More - Current Price
- $1.26
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - Nike (NYSE:NKE)
One of the common uses of NFTs is in the emerging metaverse. And that brings us to the next NFT-related stock on our list, Nike (NYSE:NKE). Nike’s emergence in the NFT space came when it patented CryptoKicks, which is still under development. The company’s collection of sneakers is already considered collectibles. So it’s not a huge mental leap to see that there will be value to individuals owning NFT versions of sneakers that they can wear in the metaverse.
Like most growth stocks, NKE stock has been under selling pressure for much of the last six months. However, this is a time when investors need to seek out quality stocks and Nike certainly fits that bill. Analysts give the stock a 30% upside from its current level. And, although its dividend is comparatively small, the company has increased its payout for the last 21 years with an average three-year growth of 11%.
About NIKE
NIKE, Inc, together with its subsidiaries, designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services worldwide. The company provides athletic and casual footwear, apparel, and accessories under the Jumpman trademark; and casual sneakers, apparel, and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks.
Read More - Current Price
- $76.51
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 16 Buy Ratings, 13 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $96.48 (26.1% Upside)
#7 - Liquid Media Group (NASDAQ:YVR)
If you remember the cheat codes for getting double bullets when you played Space Invaders on your Atari gaming platform, Liquid Media Group (NASDAQ:YVR) may be the stock for you. The company is the only Canadian-based entertainment company that is listed on an American stock exchange.
The company is expecting to launch its Red Carpet NFTs in May. This is supposed to feature famous faces from movies and television. Furthermore, the company already has a prebuilt NFT marketplace.
However, Liquid Media has also signed a distribution agreement with Atari. This is opening up speculation that the company could turn its games into NFTs. And the company is also partnering with Currencyworks (NASDAQ:CWRK) creating its own multi-token intellectual properties platform that will also make it a player in the NFT market.
However, it has to be stated that Liquid Media is yet another penny stock on this list. But with its opportunities in the NFT market, there is an opportunity for risk-tolerant investors.
About Liquid Media Group
Liquid Media Group Ltd. is a media and entertainment company, which engages in content IP spanning creative industries. It develops, produces, and distributes content across channels, and platforms. The firm operates through the following segments: Film and Video Games. The company was founded on February 4, 1986 and headquartered in Vancouver, Canada.
- Current Price
- $0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
As this presentation shows, the NFT market is loaded with potential. However, whenever you have an asset class where the value of a particular asset is wholly determined by another party's willingness to pay for it, there's bound to be volatility. And this market has its critics.
On the other hand, early adopters see NFTs as a solution for digital artists to level the playing field by allowing them direct ownership of their work. It's also another way to bring blockchain technology into the mainstream which would be bullish for cryptocurrency.
That being said, many investors will be attracted to the NFT market because there may be no better way for them to accumulate wealth. However, while the story of a tweet selling for millions of dollars grab the headlines, it will be an accumulation of much smaller transactions that will drive the growth of this market. And if companies being to see that there is market, NFTs may become very commonplace which will make several of these stocks very attractive.
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