NFT marketplace IPOs–sellout or opportunity?
High-profile sales like Beeple’s $69 million artwork have attracted most of the media hype around NFTs, but those sales are less about the investment potential and more about the rich and famous strutting their stuff–the newest iteration of an extravagant yacht or exclusive mansion.
Investors, on the other hand, are paying more attention to the infrastructure surrounding NFT commerce than to the latest Snoop Dogg drop. It makes sense–the meteoric rise of marketplaces like Amazon, Alibaba, eBay, and even Airbnb have demonstrated that marketplaces, not the products they sell, are often the major market disruptors.
And there’s plenty to watch–NFT marketplaces have been sprouting up like mushrooms after the rain following the media hype of newsworthy NFT sales. Yet not all NFT marketplaces were created equal. There is a clear frontrunner in the arena–OpenSea has established itself as the platform where the majority of NFT commerce currently takes place. The company’s market share and meteoric growth in 2021 have generated interest among investors and led many experts to believe that if it were to go public, OpenSea would likely be one of the top NFT marketplaces stocks and could lead the NFT stocks list.
Will OpenSea really become a top NFT stock?
When Brian Roberts joined OpenSea as the company’s first CFO in December 2021, people saw it as an indicator that the company was planning an IPO. That’s because Roberts is credited with guiding the ride-share company Lyft through its multi-billion IPO in 2019. Roberts isn’t denying that an IPO is a possibility. In an interview with Bloomberg, he referred to the company’s exponential growth in sales in 2021 saying, “I’ve seen a lot of P&Ls (profit and loss statements) but I’ve never seen a P&L like this. When you have a company growing as fast as this one, you’d be foolish not to think about it going public.”
There are still many obstacles on the way to an IPO however, including what OpenSea users think of the move. Roberts’ statement created an uproar–the crypto world wasn’t happy with the idea of OpenSea going public. That’s because blockchain was created to offer a community-led alternative to the financial establishment, and nothing says “establishment” and “corporate” like an IPO. For many NFT aficionados, it felt like a sell-out. Roberts was quick to roll back his statements, saying that the NFT market was still in very early stages, and an IPO wasn’t in the works at anytime soon. When it will happen, and whether it will happen at all, is yet to be seen.
What is NFT Stock? (OpenSea isn’t the only fish in the Metaverse)
Even if OpenSea doesn’t go public, it isn’t the only player in the field. When Coinbase, a publicly-traded blockchain company, announced in October 2021 that it plans to launch its own NFT marketplace in 2022, it quickly gained over 2.5 million early sign-ups. It’s already a publicly-traded company, so it could easily become one of the best NFT stocks to invest in and a good indicator of NFT stock prices.
Then there’s Mintable, an upstart that is breaking down the biggest barriers of entry into the NFT world. Normally when you mint an NFT, you are required to pay “gas fees” to compensate for the computation energy required to process transactions on the blockchain. You need a crypto-wallet stocked with cryptocurrency to buy and sell NFTs. Those requirements are off-putting for many NFT-newbies, preventing them from entering the NFT market.
Mintable has broken down those barriers offering gas-free minting options and credit card purchases for NFTs. It’s been a successful strategy–Mintable boasts 10 million monthly users. And Mintable isn’t stopping there. In December 2021, the company announced a partnership with ImmutableX to further reduce friction for developers and consumers and enable scaling. For example, ImmutableX is now purchasing carbon credits to offset gas consumed on Ethereum, making any NFT activity on the platform completely carbon neutral. These innovations position the company as a leader in the field and a possibility for an IPO in the future.
Niche NFT marketplaces like Rarible and MakersPlace are worth watching as well. Focusing on the digital art world, both companies have raised millions of dollars and attracted thousands of users. Additional niche NFT marketplaces have been launched in other fields, and more are expected to follow.
NFT marketplaces could become the next big thing
It’s still too early to predict which NFT marketplaces will go public and when, and whether they will end up becoming the most attractive NFT stocks to buy. But there is no question that while the market is still young, it’s developing fast. If nothing else, it’s worth keeping an eye on how this emerging arena develops and following the top NFT stocks to see how they perform.
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The BITA Next Gen NFT Index is a rules-based index that consists of the common stock (or depositary receipts) of companies that are building a platform or developing technology to use, or have at least one use or test case for using, NFT (Non-Fungible Token), cryptocurrency trading platforms, cryptocurrency mining, cryptocurrency banking or related services, or blockchain-related technology, as well as companies that have announced publicly that they intend to enter such space or have begun working on such products (collectively, “Crypto and Blockchain Companies”). The Index consists of companies listed on North American and European exchanges and aims to capture the potential upside generated by earnings related to the adoption of crypto- and blockchain-related technologies, including NFTs and cryptocurrency.
Neither the Fund nor its relative Index will invest directly in NFTs or any funds investing in NFTs. The Index, and as a result the Fund, are currently limited to investments in companies with exposure to the NFT ecosystem. As a result, the Fund’s price movement will not track individual or collections of NFTs. Since NFTs are an emerging technology, the Index is currently expected to consist of companies whose activities in the NFT ecosystem comprise a smaller portion of their revenues, profits, or investments relative to other activities or industries in which they engage. There can be no guarantee that a company’s activities in the NFT ecosystem will become significant for the company or that its economic fortunes will be tied to such activities in the future.
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