Are NFT Penny Stocks Now A Thing?
There’s no denying that 2021 has been a crazy year for penny stocks. While these companies are basically in the stock market’s basement, it hasn’t stopped traders from sifting through hundreds of names to identify some time of potential. Last year, it was companies with any coronavirus relationship. Whether it was testing, vaccines, or even paper products, any benefit from the pandemic was speculated on.
Later in the year, we saw attention focus on alternative energy stocks. Even companies that hadn’t put out news in months traded higher based on expectations of a green energy renaissance. That excitement spilled over to electric vehicle penny stocks. Companies that either made a vehicle, had charging stations, or even had some exposure to battery supply chains grabbed the coattails of the EV trend.
Many of these still have yet to subside. But 2021 has been centered around new industries or, at least, ones that haven’t been mainstream. Things like bitcoin and blockchain technology stocks, fintech, and even psychedelic penny stocks have come to light.
On Monday, two (former) penny stocks saw explosive gains. Were they EV companies or maybe some sort of alternative energy technology business? No, but if you’re up on the latest trend in things like cryptocurrency and blockchain, you might be familiar with what I’m about to write next. Speculative buzz put these two companies in focus thanks to the new NFT trend in finance.
What’s An NFT?
If this is completely foreign to you, NFT stands for non-fungible token. Before you start looking for NFT penny stocks to buy, let’s get some of the basics covered to understand this new trend. This “new” thing, in theory, has been around for a while. But it has recently been brought to light as several disconnected pieces have started to connect for investors and merchants alike.
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NFTs are digital “things.” An NFT can be a piece of digital artwork, a video clip, or even a gif. An elementary example is to think of it as a 1 of 1 digital trading card. Once it’s been created, it gets uploaded to an NFT marketplace, and its unique identity and ownership are verified on a proof-of-work blockchain.
What Are NFTs Used For?
In theory, there can be multiple uses for NFTs. First, they are essentially digital collector’s items. For instance, a big headline involving NFTs recently has been the $69 million art sale at Christie’s auction house. The work was done by digital artist, Beeple and was named “Everydays: The First 5000 Days.” This record-setting sale was one of the key catalysts behind the recent excitement surrounding non-fungible tokens. Beyond collectibility, however, there are other uses for NFTs.
NFTs can also be in-game assets controlled by a user instead of the game developer. These NFTs allow assets to be traded on third-party marketplaces without permission from the game developer. They can also be used for access. Think about things like music events or live streamed entertainment. It essentially creates a situation where only those who’ve purchased or own specific NFTs can gain access. But there are likely many more uses that people will find as the industry evolves.
What’s more, these can’t be purchased with cash, and the Ethereum platform is generally favored for trading in NFTs.
Celebrities Are Adding Fuel To The NFT Fire
Like most things this year, celebrity appeal is at an all-time high for “abnormal” topics. Gene Simmons, Snoop Dogg, Elon Musk, and others recently got behind the Dogecoin hype. The meme coin was created as a joke and seemingly has an unlimited supply. However, it has been sought after by those looking to go against tradition in somewhat of a rebellious stance against “the establishment.”
We’ve also seen heavyweights like Mark Cuban, Dave Portnoy, and Chamath Palihapitiya rallied behind the Wall Street Bets community as “the suits” got caught in a short squeeze for the ages in GameStop. So why wouldn’t celebrities latch onto the NFT craze? Most notably, Elon Musk’s wife and musician, Grimes, sold roughly $6 million worth of tokens representing digital art on an NFT exchange site.
There’s even a series of NFTs pushed by NFL star Rob Gronkowski. One of the more valuable NFTs in this “GRONK” series is a 1 of 1 career highlight “card” that also comes with perks. These perks include a meet and greet with GRONK and tickets to one of his games next season.
NFT Stocks Are Now A “Thing”
Now that you’ve got a little bit of background on the topic let’s look at the latest market hype: NFT stocks. It looks like speculation is king right now, and here’s why I say this. Former penny stock company ZK International (NASDAQ: ZKIN) actually came out with NFT-related news on Monday.
The company’s subsidiary, xSigma Corporation, said that it would launch its newest project, allowing it to participate in the industry. In this case, xSigma is creating an NFT marketplace for users to buy and sell these tokens.
The interesting part is that the move in the market was “only about 36%.” I say only for the simple fact that two other penny stocks didn’t release any news but saw their shares skyrocket over 100% during Monday’s late afternoon session.
Penny Stocks Surge Over 100% On NFT Speculation
In this case, shares of Oriental Culture Holding Ltd (NASDAQ: OCG) and Takung Art Co Ltd (NYSE: TKAT) experienced explosive moves in the stock market. Neither of the companies released headlines nor posted corresponding filings that could’ve remotely been a catalyst for the latest moves. What they did have, however, were business models centered around online art sales.
Oriental, in particular, offers a platform for trading collectibles and commodities. Meanwhile, Takung allows collectors and investors to acquire shared ownership in Asian and other fine art. Interestingly enough, if you look at their respective websites, there are eerily similar aspects between the two. While there’s no apparent connection on the surface, it is something interesting to note.
In any case, NFT speculation has given a boost to these former penny stocks. By the closing bell, TKAT stock had moved from $4.06 at the open to highs of $9.30. Shares of OCG stock had moved from $4.61 at the opening bell to highs of $9.65 by the end of the session. Will this mark the debut of a new class called “NFT penny stocks”? Leave a comment below if you’re starting to follow stocks with exposure to this new arena.