Chicago photographer, Brittany Pierre was working for $15 an hour with $10 in her bank account when she learned about the potential of NFTs. Within a year, she’d made more than $100,000 in the NFT market, completely changing the trajectory of her life.
As one of the newest types of investments available today, NFTs have massive potential. However, that potential is tied to many unknowns. Many of the world’s top financial experts feel divided on the long-term value of this blockchain technology. Is investing in an industry with so much uncertainty worth the risk?
The answer depends on every investor’s risk comfort level.
In this article:
- Find out why so many people are taking the leap and adding NFT stocks to their investment portfolios
- How to start investing in NFT stocks
- Which stocks you should watch in 2022
Why Invest in NFTs?
With a stunning 21,350% YOY increase, the NFT market was valued at nearly $18 billion in 2021. The value has not yet hit its peak, though. Leading investment bank Jeffries forecasts the NFT market to reach $35 billion in 2022 and over $80 billion in 2025.
With major growth on the horizon, many experts predict NFT stocks to become an important part of a smart personal finance strategy. When $24 billion dollar company Visa entered the NFT market, the multinational bank’s head of crypto, Cuy Sheffield, explained Visa believes NFTs are here to stay.
“We think NFTs will play an important role in the future of retail, social media, entertainment, and commerce,” Sheffield said, “NFTs are starting to usher in a new form of social commerce that empowers both creators and collectors.”
The Risks of Investing in NFT Stocks
While some experts predict strong returns on NFT investments, others urge caution. Financial advisor, Humphrey Yang, explains NFT stocks are, “[E]ssentially gambling but people don’t really know the difference, and they buy them because they’re fun.” With that said, before jumping all in on NFT stocks, be sure you understand the risks.
As a brand new technology, there’s very little we can know about the NFT industry. Some financial analysts warn that the NFT market looks dangerously like a bubble that could pop at any time. But without historical data to compare it to, it’s tough to know whether to heed the warning signs or dismiss them as fearmongering.
Unlike a piece of land or tool that improves healthcare, it’s hard to measure the actual value of an NFT or NFT stock. Until the bubble pops—or doesn’t—we won’t know if there ever was a bubble at all.
As a new blockchain technology, NFTs could likely follow similar trends as the volatile value of cryptocurrency. Minor and unpredictable events lead to significant changes in the value of many cryptocurrencies. For instance, tweets from Elon Musk have altered both Bitcoin and Dogecoin’s value by as much as 11%.
How to Invest in NFTs
As you can see, it’s unclear whether or not NFTs and NFT stocks will in fact be a great long-term investment. With this information, keep in mind the following tips in order to make a well-informed decision about this potential asset.
- Start small: While experts like Yang call NFT-investing a gamble, the rapid growth in the market leaves many investors fearful of missing out on a one-of-a-kind opportunity. If you start small and add a few NFTs to a diversified investment portfolio, you’ll get a feel for the market, while mitigating risk.
- Familiarize yourself with the market: Many NFT investors start their portfolios by buying and selling NFTs as digital assets. Digital collectibles lead the NFT market with 8.47 billion sales in 2021, followed by virtual gaming items and digital art with 5.18 billion and 2.8 billion sales respectively. Creators in these industries have been some of the earliest adopters of the technology. John Fleckenstein, COO at RCA Records, explained why creators in these industries have quickly and whole-heartedly adopted NFTs. He said, “Anything that is business reliant on intellectual property rights, in particular in the digital space, this is a potential game-changer . . . This all of a sudden offers up the idea of bringing scarcity to the digital space, which is exciting for us.”
Purchasing a collectible, digital artwork, or gaming item is a great way to learn how these digital assets are traded, stored, and funded. Find out how to purchase your first non-fungible token below.
How to Buy Your First NFT
- Choose an NFT you like: The easiest way to browse and find NFTs is on an NFT marketplace, like OpenSea, Axie Marketplace, or Rarible. Sports fans might visit the NBA Top Shot NFT market to purchase a collection of videos of notable moments from the season. A gaming enthusiast could buy an NFT that functions as a ticket into gameplay in an exclusive Minecraft Metaverse. Look for something fun for you instead of starting out looking for the best investment.
- Find out which cryptocurrency you’ll need: Ethereum is the most common cryptocurrency needed to buy NFTs because most NFTs are Ethereum-based. Many marketplaces will also accept other popular cryptocurrencies like Bitcoin, Solana, and Polygon.
- Open a crypto wallet: A crypto wallet allows you to buy, store, and trade cryptocurrency. Your wallet will need to be compatible with your desired cryptocurrency and marketplace. OpenSea connects with Metamask, Coinbase Wallet, WalletConnect, and a number of other popular wallets. NBA Top Shot requires the Dapper Wallet. Find a compatible wallet for your favorite marketplace. Once you’ve opened your wallet, you’ll connect your bank account or credit card to purchase crypto. Then, connect your wallet to the marketplace, and you’re ready to go.
- Make your purchase: With your wallet set up, all that’s left to do is browse the marketplace, select a few of your favorite NFTs, and add them to your collection.
Add NFT Stocks to Your Investment Portfolio
When you’re familiar with the ins and outs of the blockchain world, the next investment step is adding NFT stocks to your portfolio. Investment expert Jose Najarro believes NFTs are here to stay, so it’s time to learn the market. That doesn’t mean investors should go all in, though.
Najarro explained the role NFTs play in his investment portfolio. He said, “It’s a very small percentage of my portfolio . . . probably 2-3% . . .”
Holding stock in an NFT-related company brings greater diversity to your investments. The NFT stocks list below can help you find the right stocks to add to your portfolio.
Secure NFT Stocks to Buy
There’s risk involved in every investment and even more so in NFT investments. However, investing in historically stable companies that are moving further into the NFT space allows you to begin NFT investing while minimizing the gamble that comes with it.
1. Disney (DIS)
Disney stock is one of the most consistently well-performing stocks in the market. With a 13.41% return, compared to the NYSE composite 10-year return of 6.63%, the Walt Disney Company has a 102% higher return than the NYSE composite.
After hitting an all-time high in March 2021, the price of Disney stock has been steadily dropping. However, experts forecast Disney stock to come back up over the next 12 months, with a median estimate of a 45.4% increase.
The move into the NFT space may be a driving force behind the forecasted rise in Disney’s value. The company launched a line of NFT collectibles in late 2021. With access to highly collectible brands like Marvel, Star Wars, and the Disney Princess Line, the Walt Disney Company has a nearly endless store of marketable digital art.
Investment in this stock could allow you to balance the security of a long-term, proven company, with the high-value creating potential of NFTs. Former Disney CEO, Bob Iger shared his thoughts on whether NFTs have lasting value in the marketplace.
He stated, “We forget, in our generation, that things don’t have to be physical. They can be digital, and they have meaning to people. And as long as that meaning can be essential substantiated in a blockchain, I think you’re to see an explosion of things being created, traded, collected in NFTs.”
As for whether or not Disney will be a major player in the rising NFT world, Iger says, “When you think about all the copyright[ed] and trademark[ed] characters Disney has, and the NFT possibilities, they’re extraordinary.”
2. Nike (NKE)
Over the last half a century, Nike has become a powerhouse in the collectibles industry with its Air Jordan line and other popular shoes.
A 2022 list of the most valuable shoes in the world found 18 out of the 20 most valuable shoes were Nikes. With a significant presence in the physical collectibles industry, Nike is well-positioned to create value in the digital collectibles industry.
NFT skeptics don’t have to worry about major losses when investing in Nike. An investment in Nike stock gives investors access to the stability of the well-built brand that continues to sell successful athletic gear while also creating the potential for significant gains as NFTs grow in popularity. Analysts forecast Nike’s growth will be 4.3% on the low end and 46.3% on the high end.
3. Mattel (MAT)
Over the past half-century, Hot Wheels has proven its value as a collectible brand. One of the most highly valued Hot Wheels collections includes over 7,000 items worth over $1 million. The popular toy company launched its first Hot Wheels NFT collection in 2021, bringing the collectible brand into the space.
As the owner of other highly-valued brands like Barbie and American Girl, Mattel is positioned for significant growth as it moves further into the NFT space. The low-end forecasts predict a 20.4% increase in MAT stock prices over the next twelve months, while high-end forecasts predict a 108.3% increase.
High Risk, High Reward NFT Stocks
If you’re a highly aggressive investor, you may be willing to take on high-risk investments with the hope that you’ll receive an even higher return. If so, these are the stocks for you.
These stocks are more directly tied to the success of the NFT industry, making their value less diversified and less proven than other stocks. But if conditions are right, you could see significant ROI. If you’re ready for a high risk, high reward opportunity, consider the following stocks.
4. Coinbase (COIN)
Coinbase operates the largest cryptocurrency exchange platform by trading volume. While not yet available, in late 2021, the company announced the upcoming launch of its NFT exchange platform. CEO, Brian Armstrong, believes the company’s NFT sector could be even more successful than its cryptocurrency ventures.
Since the announcement of Coinbase NFT, more than 2.5 million people have joined the waitlist. If Coinbase NFT proves successful, the value of Coinbase stock will likely see significant growth.
Analysts predict strong returns for Coinbase stock over the next twelve months, with a median forecast of 86.3% and a high-end forecast of 306.5%. However, the increase in price isn’t a guarantee. The lowest-end forecasts predict an 8.5% decrease in the value of COIN stock.
5. Cinedigm (CIDM)
Entertainment company and streaming service, Cinedigm, has been getting recent attention from NFT investors after announcing in March 2022 that it would be developing NFT products. After the announcement, shares rose 28%.
While Cinedigm shares have been in a downward trend, when the NFT product line launches, investors can expect to see significant growth in value. Shares are currently priced under $1, but low-end forecasts expect shares to see a 349.4% increase in value over the next twelve months. Even more promising, high-end forecasts predict a 541.9% increase.
6. Marathon Digital Holdings (MARA)
Marathon Digital Holdings is a digital asset company that allows users to purchase and trade NFTs. As one of the largest bitcoin mining operations, MARA stock prices are closely tied to Bitcoin, the most popular and valuable cryptocurrency currently available.
As a company tied to the blockchain ecosystem, forecasts for MARA stock closely follow predictions for the NFT market. On the low-end, experts forecast a 114% increase in MARA stock prices over the next twelve months and a 183.3% increase on the high end.
Are NFT Stocks a Good Investment?
As economist Flora Harley said, “Some may think the world has gone mad. It’s true that some NFTs are trading at overinflated values, but that doesn’t mean they’re a bubble about to burst . . . Ultimately, I believe NFTs will gain even more popularity as an asset class as investors begin to understand them better.”
Whether you’re an aggressive investor looking for high-risk, high-reward NFT investments or you’re interested in a reliable long-term investment, there’s likely an NFT stock for you.