In this article, we discuss 10 best NFT stocks to buy now. You can skip our detailed analysis of non-fungible tokens and the outlook of the industry, and go directly to read 5 Best NFT Stocks to Buy Now.
NFTs, or non-fungible tokens, are digital assets that represent ownership of a unique item or a piece of content. NFTs utilize blockchain technology, which ensures their authenticity and traceability. While this concept had been around for a few years prior, it was in 2017 that NFTs captured mainstream attention and generated widespread interest through the launch of Cryptokitties, a blockchain-based game. It allowed users to collect, breed, and trade virtual cats represented as NFTs.
NFTs are primarily bought and sold through NFT marketplaces, which serve as platforms where creators can list their NFTs for sale, and buyers can browse and purchase those NFTs. Some well-known marketplaces include OpenSea, Rarible, Foundation, and Mintable. Investing in NFTs can be challenging for amateurs as it requires a combination of research, knowledge, and personal preferences. The best NFTs for beginners would be those that are unique, well-executed, and have the potential to grow because the market is highly volatile and subject to rapid changes.
In 2021, a significant surge in interest, adoption, and activity surrounding NFTs was observed. Numerous high-profile NFT sales and collaborations with mainstream artists, musicians, athletes, and brands captured broad interest and media coverage. One notable example was the sale of Beeple’s artwork, “Everydays— The First 5000 Days,” which fetched $69 million at auction in March 2021. This sale made headlines and solidified NFTs as a viable platform for digital art. However, high-interest rates and inflation last year brought the sustainability and long-term value of the NFT market into question. In December 2022, NFT sales dropped to their lowest level since July 2021, as reported by Bloomberg. Reuters also mentioned DappRadar data in its report, highlighting that NFT sales fell to $3.4 billion in the third quarter of 2022, from $8.4 billion in the prior-year quarter.
Despite such performance last year, the overall NFT market showed signs of recovery in 2023. According to DappRadar, a total of 19.4 million NFTs were sold during the first quarter of 2023, up 8.5% from the previous quarter. The report also mentioned that the trading volumes climbed $4.7 billion during the quarter, showing a 137% growth from the preceding quarter. In addition to this, the development of user-friendly marketplaces and improved infrastructure contributed to growing sales. For example, Blend, a new peer-to-peer perpetual lending platform, made over $442 million in sales in May. Launched on May 1, Blur now represents 65% of the overall NFT market share, as reported by Fortune.
The gradual rise of digital art and collectibles has fueled the growth of the NFT market. According to Market Research’s report, the NFT market is expected to grow at a CAGR of 27.6% from 2022 to 2032, gaining a value of $342.5 billion. The report also highlighted that the market was valued at $38.2 billion in 2022.
NFTs also grabbed the attention of some major companies and brands. The Coca-Cola Company (NYSE:KO) auctioned its NFTs for over $575,000 in 2021. Similarly, McDonald’s Corporation (NYSE:MCD) launched a limited edition of McRib NFTs in 2021 to celebrate the 40th anniversary of its pork sandwich. NIKE, Inc. (NYSE:NKE)’s Cryptokicks is the company’s first virtual sneaker collection, featuring over 20,000 unique NFTs.
Photo by Sajad Nori on Unsplash
Our Methodology:
We scoured Insider Monkey’s database of 943 hedge funds as of Q1 2023 and selected companies that are directly or indirectly involved in the creation and selling of NFTs and also pursued NFT-related goals. The stocks are ranked in ascending order of the number of funds that have stakes in them as of Q1.
10. Funko, Inc. (NASDAQ:FNKO)
Number of Hedge Fund Holders: 11
Funko, Inc. (NASDAQ:FNKO) is a Washington-based toy company that sells unique pop culture collectibles, accessories, and toys. It officially entered the NFT market in 2021 with its Digital Pop! series, which are NFTs in the form of digital collectibles that features the company’s unique stylized figures. In 2022, the company announced its partnership with Warner Bros to create some of its most beloved iconic characters.
In the first quarter of 2023, Funko, Inc. (NASDAQ:FNKO) reported a 61% year-over-year growth in its direct-to-consumer net sales, driven mainly by e-commerce capabilities. The company’s revenue for the quarter came in at roughly $252 million. Its Core Collectible segment generated over $183.4 million in revenues. FNKO is among the best NFT stocks to buy on our list.
Other companies that are involved in the NFT space include The Coca-Cola Company (NYSE:KO), McDonald’s Corporation (NYSE:MCD), and NIKE, Inc. (NYSE:NKE).
At the end of Q1 2023, 11 hedge funds in Insider Monkey’s database reported having stakes in Funko, Inc. (NASDAQ:FNKO), compared with 15 in the previous quarter. These stakes have a collective value of over $62.5 million.
9. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 28
Coinbase Global, Inc. (NASDAQ:COIN) is an American company that operates a cryptocurrency exchange platform. The company’s marketplace for NFTs, Coinbase NFT, allows users to buy, sell, and discover NFTs from different artists and creators. Since its launch in April 2022 through February 2023, the company’s total NFT trading volume came in at $7.3 million.
In the first quarter of 2023, Coinbase Global, Inc. (NASDAQ:COIN) reported revenue of $772.5 million, which beat analysts’ estimates by $119.2 million. The company’s operating cash flow for the quarter came in at over $463 million, up from $91.3 million during the same period last year. It is one of the best NFT stocks to buy now.
In May, Atlantic Securities upgraded Coinbase Global, Inc. (NASDAQ:COIN) to Overweight from Neutral with a $70 price target, following the company’s strong quarterly earnings.
As of the close of Q1 2023, 28 hedge funds tracked by Insider Monkey owned stakes in Coinbase Global, Inc. (NASDAQ:COIN), up from 27 in the previous quarter. These stakes are collectively valued at over $1.15 billion. With over 11.7 million shares, ARK Investment Management was the company’s leading stakeholder in Q1.
8. Mattel, Inc. (NASDAQ:MAT)
Number of Hedge Fund Holders: 31
Mattel, Inc. (NASDAQ:MAT) is an American multinational toy manufacturing company, based in California. The company’s first-quarter revenue of $814.6 million beat Street estimates by $73.86 million. It generated over $206 million in operating cash flow, showing an increase of $63 million from the prior-year quarter. MAT is among the best NFT stocks on our list.
In November 2022, Mattel, Inc. (NASDAQ:MAT) launched its own NFT marketplace on its direct-to-consumer platform, Mattel Creations. Recently, the company unveiled its second non-fungible collection, featuring cars from the blockbuster Fast & Furious movie franchise. It will be selling this limited collection for $20 per pack.
In April, DA Davidson reiterated its Buy rating on Mattel, Inc. (NASDAQ:MAT) with a $23 price target, highlighting the company’s direct-to-consumer segment. The firm also expects the company to deliver strong sales this year.
The number of hedge funds tracked by Insider Monkey owning stakes in Mattel, Inc. (NASDAQ:MAT) grew to 31 in Q1 2023, from 27 in the previous quarter. These stakes have a collective value of roughly $984 million.
Ariel Investments mentioned Mattel, Inc. (NASDAQ:MAT) in its Q4 2022 investor letter. Here is what the firm has to say:
“Toy manufacturer, Mattel, Inc. (NASDAQ:MAT) also weighed on relative returns in the quarter. Although sales came in slightly lower than expectations, strong gross margins drove a solid earnings beat. MAT maintained its full-year revenue outlook but lowered its EPS guide to account for Fx headwinds and greater promotions and discounts on high price-point items. We remain encouraged by management’s execution on its strategy to grow market share, improve profitability and generate higher levels of cash flow. We continue to view MAT as an undervalued asset with attractive growth prospects, particularly with the reintroduction of the Disney Princess and Frozen toy lines, Trolls, the global launch of Monster High, and product support around the highly anticipated Barbie movie in 2023.”
7. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 37
A sports betting company, DraftKings Inc. (NASDAQ:DKNG) is next on our list of the best NFT stocks to buy now. The company’s NFT market allows users to access, view, or sell their NFTs bought through the company. The marketplace is particularly popular among those looking to trade sports collectibles.
In the first quarter of 2023, DraftKings Inc. (NASDAQ:DKNG) generated $770 million in revenues, which showed an 84.7% growth from the same period last year. The company also reported a 39% year-over-year growth in its Monthly Unique Payers (MUP) to 2.8 million on average.
DraftKings Inc. (NASDAQ:DKNG) is gaining positive ratings from Wall Street analysts following its strong quarterly earnings. In June, both BTIG Research and Jefferies Financial Group raised their price targets on the stock to $31 and $35, respectively.
As of the close of Q1 2023, 37 hedge funds in Insider Monkey’s database owned stakes in DraftKings Inc. (NASDAQ:DKNG), up from 32 a quarter earlier. The total value of these stakes is over $1.1 billion.
Baron Funds made the following comment about DraftKings Inc. (NASDAQ:DKNG) in its Q1 2023 investor letter:
“We re-initiated a position in former Fund holding DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook, digital casino, and daily fantasy sports operator. DraftKings’ mobile applications offer consumers the ability to wager on a wide variety of sporting events and play hundreds of real-money casino games. The company has spent the past three years building a proprietary technology stack that improves the customer experience and delivers best-in-class breadth of bet types (such as parlays, same-game parlays, and player props). State-level online sports betting (OSB) and iCasino legalization, along with a multi-year consumer adoption timeline in active states, has supported a 90% revenue growth rate for DraftKings since 2020. The opportunity for OSB legalization remains significant, with under 50% of the U.S. population currently having legal mobile sports betting. We expect 65% to 80% of the population will eventually have access to OSB. ICasino is currently legal in just seven states representing roughly 13% of the population. ICasino product adoption in legalized states has been robust, with the average user spending twice as much as a sports bettor. While the pace of legalization for iCasino has been slower, we believe additional states will pass regulation in the coming years.
As U.S. states began to legalize sports betting, the DraftKings management team moved quickly to build widespread brand awareness. DraftKings is the #2 operator in both OSB and iCasino by a wide margin, and has demonstrated improving market share trends across almost all states. When a new state legalizes sports betting, DraftKings has a first mover advantage as many of its customers are converted from the DraftKings daily fantasy sports offering. The quality of their sportsbook product along with increasingly targeted promotional spending results in strong customer retention and high lifetime values. In states where iCasino is legal, DraftKings can cross-sell OSB customers. DraftKings’ scale and product advantages are creating a flywheel that will enable the company to continue to out-invest the competition in acquisition marketing, retention, and research and development. The high barriers to entry are resulting in a consolidated industry that will eventually lead to a highly profitable business. This is evidenced by older-vintage state contribution margins that are already approaching 40%. Longer term, we believe DraftKings can generate EBITDA margins between 20% and 30% with strong free-cash-flow conversion.”
6. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 41
Cloudflare, Inc. (NYSE:NET) is a California-based IT service management company that provides a wide range of services, including cloud and cybersecurity. In the first quarter of 2023, the company reported revenue of $290.2 million, up 36.8% from the same period last year. Its operating cash flow for the quarter came in at $36.4 million, which represented 13% of its total revenue. The company also generated roughly $14 million in free cash flow.
In 2021, Cloudflare, Inc. (NYSE:NET) announced that its Cloudflare Stream platform supports NFTs. The platform allows users to host and deliver video content associated with NFTs. The Coca-Cola Company (NYSE:KO), McDonald’s Corporation (NYSE:MCD), and NIKE, Inc. (NYSE:NKE) are some other major companies expanding their NFT exposure.
At the end of March 2023, 41 hedge funds in Insider Monkey’s database reported having stakes in Cloudflare, Inc. (NYSE:NET), up from 40 in the preceding quarter. These stakes are collectively worth $774.7 million.
Baron Funds mentioned Cloudflare, Inc. (NYSE:NET) in its Q1 2023 investor letter. Here is what the firm has to say:
“We also added to Cloudflare, Inc. (NYSE:NET) during the quarter, the leading cloud-based networking and software infrastructure provider. Despite facing a macro-driven elongation of deal cycles, the company reported solid quarterly results with 42% year-over-year revenue growth, while also guiding to 37% growth for 2023. The company’s speed of innovation enables it to continuously grow its opportunity set as it adds more products to its platform, solving additional problems for customers from network services to zero-trust. Its scale-based competitive advantages enable it to be the low-cost provider in the industry, while also having significant volumes of data to power its AI models and improve its product over time. Once it gets customers on board, Cloudflare is then able to cross-sell them additional networking and security solutions at high marginal profitability, as they are served on the same underlying infrastructure and thus the company doesn’t need to spend once more on customer acquisition. This creates a virtuous cycle that should enable Cloudflare to become an important part of the infrastructure layer of organizations over time, in our view.”
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Disclosure. None. 10 Best NFT Stocks to Buy Now is originally published on Insider Monkey.
