Explained: NFT stocks and how they work

Today, non-fungible tokens or NFTs have come to a place where cryptos were in 2016 — most know of their existence but aren't entirely sure of their utility or potential. What garnered people's attention when it came to NFTs was all the money flooding into the nascent space. Every rockstar, sports club or anyone who was anything launched their own NFT collection last year and sent the NFT market rocketing up.

The result was a bubble that was soon to burst. Today, the trading volumes of NFTs on OpenSea have reduced by 99 percent from their peak. We also hear stories of NFTs that were priced in the millions last year that are now valued at less than a few hundred or thousand dollars.

Yes, it is perhaps the end of blind creating, buying and selling NFTs at illogically exorbitant amounts. You might not hear of too many cases of NFTs priced at ungodly amounts for no rhyme or reason.

But no, it is not the end of NFTs. They are sure to become more utility based, where you can be assured that the majority is not just buying NFTs to sell them to someone who would pay more later. Moreover, it will also lead to new ways to invest in these digital assets, including NFT stocks.

As the NFT crash has gotten people skeptical of its future, a new way to invest in them, perhaps more intelligently, has emerged. NFT stocks refer to shares of any listed company that is actively pursuing NFT-related goals, whether it is by creating an NFT marketplace, their own collection or an NFT-enabled product.

Simply put, if a future rise in the NFT market proves good for a company's share value, it is an NFT stock.

There are two significant advantages of investing in an NFT stock. First, it is the only way to benefit from the rise of NFTs without the risk that comes with them. With an NFT stock, you know that you're invested in a business that genuinely understands NFTs and doesn't see it as a stockpile of overvalued collectables but as a utility-based tool of the future.

Your hard-earned money spent on an NFT stock is advantageous because the listed companies are diversified enough to not just depend on the adoption of NFTs. If a shoe company is getting into NFTs, they still have their shoe sales and other sources of revenue to keep the stock balanced or soaring.

The second advantage is the simplicity of buying a stock instead of an NFT. With NFTs, you ought to research well, create wallets, be careful with the keys to the wallet, pay gas fees, understand marketplaces and more. With NFT stock, you're saving yourself the trouble as the business has scores of teams working to understand, develop and make money out of NFTs.

Listed below are some NFT stocks that can be viable investments for individuals looking to make NFT money without the NFT risk.

While the Meta stock is having its worst run in recent history, it remains a good stock for the future, especially with its current undervalued price. Meta is working on a whole host of endeavours that, if successful, could do a world of good for its stock. For instance, Instagram will soon allow select creators to make and sell NFTs directly in its app. And with a user base greater than any other business on the planet and a diverse user demographic, the company has a brilliant foundation to create unique NFT-related projects.

Nike has always been quick to adapt to the ongoing trend. It already creates collectables with its sneakers and has well-placed partnerships with global sporting superstars. Nike is now looking to extend its collectables fever to the NFT world and has already put out collections that have sold like hotcakes. An investment in Nike today doesn't just give you a share of their NFT exploits but also their global sneaker business.

The company raised eyebrows in May when it announced its foray into the NFT market. However, the move isn't that surprising since the platform is all about trading unique collectables. Further, since the announcement, eBay has been busy building partnerships and investing in NFT projects. For instance, the e-commerce giant partnered with OneOf, a leading web3 NFT platform, to release a limited edition NFT collection with ice-hockey legend Wayne

A short while later, in June, the company also purchased Known Origin, another leading NFT marketplace. By itself, eBay has nearly 150 million buyers scattered around the globe and is well-positioned to take the NFT market by storm.

Funko is another company that could be worth investing in. Last year, the collectable toy maker launched an NFT collection called Digital Pop! in collaboration with leading NFT marketplace Droppp. In recent months, the company also acquired the NFT platform, TokenWave and purchased a collectables business called Mondo. Both these acquisitions should stand the company in good stead in the future.

Another NFT stock that's garnering a lot of attention is Dolphin Entertainment. The company provides publicity and marketing services and boasts an impressive 90 percent average revenue growth over the last five years. Recently, the company decided to start a dedicated NFT division called Dolphin Digital studios and is working with crypto exchange FTX.US to develop large-scale NFT marketplaces for the sports and entertainment industry.

Around the same time, the company also launched two NFT collections, Creature Chronicles: Exiled Aliens and the Olympics Winter Sports Champions, both of which did well on the market.

The NFT bubble may have burst, but these digital assets are still considered good investments. Moreover, through NFT stocks, you have a less risky way to invest in this nascent yet burgeoning asset space. If the NFT market does well, it should also lead to considerable buoyance for your NFT stocks. Just remember that any investments, NFT or otherwise, need to be backed by substantial research. NFT markets are known to be volatile and cannot be predicted. Therefore, one should only invest as much as they are comfortable losing completely.