- Coinbase (COIN): The widely followed crypto platform’s new NFT marketplace could grow even larger than its crypto trading business.
- Dolphin Entertainment (DLPN): The entertainment marketing company operates large-scale NFT marketplaces for prominent sports and entertainment brands.
- Funko (FNKO): This pop collectibles company aims to boost revenue by 20% to 25% in 2022.
Non-fungible tokens, or NFTs, have seen significant hype over the past year, making NFT stocks one of the hot investing trends of 2021. Crypto bulls regard NFTs as a gateway to the metaverse, helping build community, virtual identity and social experiences.
Moreover, data from market tracker DappRadar reveals that NFT sales volume reached $24.9 billion in 2021, compared to just $94.9 million in the previous year. Therefore, it’s no surprise that more investors are adding NFT stocks to their portfolios. These companies use and support the NFT ecosystem, including companies specializing in blockchain technologies, NFT marketplaces and payment processors.
Crypto analysts at Jefferies estimate that the NFT market could be worth $35 billion this year and roughly $80 billion by 2025. However, the Defiance Digital Revolution ETF (NYSEARCA:NFTZ) has declined 35% year-to-date (YTD) due to the sell-off in growth stocks.
With that information, here are three of the best NFT stocks that could generate lucrative returns in 2022:
Coinbase Global (COIN)
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Our first NFT stock is Coinbase Global (NASDAQ:COIN). It operates one of the largest cryptocurrency exchange platforms, with roughly 89 million verified users in more than 100 countries.
Coinbase announced fourth-quarter 2021 results on Feb. 24. Revenue skyrocketed 400% year-over-year (YOY) to $2.49 billion. Net income came in at $840 million, or $3.32 per diluted share, up from $177 million in the previous-year quarter. Cash and equivalents ended the period at $7.1 billion.
Wall Street is excited that the company is set to launch its own NFT marketplace in the coming months. Around 3.7 million people are currently on the waitlist for Coinbase NFT.
CEO Brian Armstrong remarked that the NFT platform could become “as big or bigger” than its crypto trading business. In addition, the crypto exchange also partnered with Mastercard (NYSE:MA) to facilitate and simplify the NFT purchasing process.
Yet, COIN stock hit an all-time low in recent days, falling over 47% YTD. Shares are trading at 4.1 times trailing sales. Meanwhile, the 12-month median price forecast for Coinbase stock stands at $273.
Dolphin Entertainment (DLPN)
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Our next NFT stock is Dolphin Entertainment (NASDAQ:DLPN). This entertainment marketing and content development group counts several top brands among its clients. Its subsidiaries include 42West, Shore Fire Media, and The Door.
Dolphin Entertainment released Q4 2021 results on April 13. Revenue soared 57% YOY to $10.5 million. Net loss for 2021 widened to $6.5 million, or 85 cents loss per diluted share, compared with a loss of $1.9 million in 2020. Cash and equivalents ended 2021 at $7.7 million.
In August, the company launched a partnership with the crypto exchange company FTX.US to develop large-scale, consumer-facing NFT marketplaces for major sports and entertainment brands.
Dolphin recently announced Creature Chronicles: Exiled Aliens, its first generative NFT collection. In addition, Dolphin launched an Olympics Winter Sports Champions NFT collection in January, bringing together comic book heroes and athletes.
Like many other growth names, DLPN stock has declined almost 54% YTD. Now, shares are trading at 1 times trailing sales. At present, the one analyst on record for DLPN stock has a 12-month median price forecast of $30.
Source: Lutsenko_Oleksandr / Shutterstock.com
The last of my NFT stocks is Funko (NASDAQ:FNKO), one of the largest manufacturers of licensed pop culture collectibles worldwide. The company relies heavily on its licenses and agreements with producers and creators of TV shows, movies and video games.
Funko announced Q4 2021 results on March 3. Revenue grew 48% YOY to a record $336 million. Adjusted net income came in at $20.4 million, or 38 cents per diluted share, up from $15.2 million a year ago. Cash and equivalents ended the period at $83.6 million.
In 2021, Funko launched Funko Digital Pop, its line of NFTs that feature its unique artistic style in figures. When opened, each Digital Pop offers a chance to uncover a rare Funko Digital Pop, which can be redeemed for a limited-edition physical Pop.
FNKO stock lost 11% YTD. As a result, shares are trading at 0.70 times trailing sales. Finally, the 12-month median price forecast for Funko stock stands at $26.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
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