The Best Way for Retail Investors to Play NFTs

The stock and cryptocurrency markets initially did not react very well to the Feb. 24 news Russia had invaded Ukraine. Both experienced heavy losses in early trading. However, as the day wore on, things seemed to recover somewhat.

Investors are wondering where the safe havens are during these times of crisis. While the realistic answer is nowhere, some investments are better than others right now.

One area where retail investors might be able to make some money in the near future is through non-fungible tokens (NFTs) and the digital collectibles marketplace.

In 2020, the NFT market was worth approximately $250 million. By the end of last year, it ballooned to $41 billion. So there’s no question the NFT market is one of the fastest-growing investment opportunities in the world.

The question for retail investors is how best to play the NFT market without getting slaughtered.

Here are some possibilities.

A Side Door Pass to the Biggest Fish in the NFT Market

If you go to OpenSea’s website, you will see it describe itself as follows:

“The world’s first and largest digital marketplace for crypto collectibles and non-fungible tokens (NFTs). Buy, sell, and discover exclusive digital items.”

Dig a little deeper and you’ll find out that it was founded in 2017, has 70 employees, more than 600,000 people use OpenSea, generating more than $10 billion in volume. Investors backing OpenSea include Mark Cuban, Ben Silberman, Tobie Lütke, the founder and CEO of Shopify (SHOP), and even the NBA’s Kevin Durant.

It’s a big deal.

Unfortunately, the average person can’t gain admission to this exclusive club. Members only. So what can you do?

The easiest way at the moment is to invest in the stocks of companies that are using NFTs to market their businesses.

A perfect example is Coca-Cola (KO). It launched four unique Coca-Cola NFTs on July 30, 2021, to celebrate International Friendship Day. The NFTs were auctioned off in the OpenSea marketplace. Proceeds went to Special Olympics International. The winning bidder also won a fully-stocked retro Coca-Cola refrigerator.

“Coca-Cola is one of the most collectible brands in the world, and it has shared its rich heritage with consumers through simple moments of joy for decades,” said Selman Careaga, president, Global Coca-Cola Trademark.

Care to guess the winning bid for the four NFTs auctioned off by Coke? More than $575,000.

As the company becomes more comfortable using NFTs in the future, you can be sure that Coca-Cola will figure out how to make these initiatives pay for themselves.

Two Other Companies Where NFTs Make Total Sense

While there are environmental concerns about the impact of NFTs, large businesses will figure out how to take on more projects without affecting their good names or the world at large.

Other public companies doing big things with EFTs include Nike (NKE) and Mattel (MAT). Nike launched Nikeland on Roblox (RBLX) in November. Then, in early December, it acquired digital sneaker company RTFKT.

Mattel auctioned off three digital art pieces in June 2021 on its Mattel Creations website. The NFTs were three classic Hot Wheels vehicles. It plans to roll out NFTs across many of its brands.

“Mattel Creations is the perfect platform for us to present limited edition collector products that speak to our incredible fan base as well as attract new fans to our vast portfolio of pop culture brands. Toys as art, and art inspired by toys,” CNBC reported Mattel COO Richard Dickson stated last June about the NFT auction.

I’ve given you three possible ways to buy your way into the NFT marketplace in KO, NKE, and MAT stocks. Four actually, if you also add Roblox to the mix.

The opportunities for consumer brands are endless.

Where Else Can Retail Investors Look?

Another possible way to invest in NFTs without purchasing them directly through OpenSea or one of the other NFT marketplaces would be to buy Ethereum (ETH) or one of the other cryptocurrencies whose blockchains support NFTs such as Solana (SOL) or Binance (BNB).

That’s a lot riskier given the recent volatility of cryptocurrencies, but it’s an option nonetheless.

Another two public companies that aren’t necessarily consumer brands like Coke and Nike but participate in the NFT market are DraftKings (DKNG) and Cloudflare (NET).

DraftKings, one of the largest online sports betting companies in the U.S., first announced its DraftKings Marketplace in July 2021. It is primarily focused on providing prominent professional athletes with a vehicle to sell their digital collectibles. While it’s still early in the NFT marketplace’s development, there’s no question it could become a significant piece of business for DraftKings.

As for Cloudflare, it helps content creators get their videos online while ensuring the live streaming quality is exceptional. Its Cloudflare Stream product enables content creators to tie their videos to an NFT. The company believes it’s a less expensive way to store and distribute these videos than decentralized storage.

As time passes, retail investors will gain additional ways to invest directly in the NFT market without buying an NFT.

There’s no question NFTs are one of the most exciting innovations of blockchain technology and digital assets. It will be interesting to see where this all leads.

Hopefully, the little guy will be able to benefit from NFTs. I guess we’ll see.