Report: Fanatics dump stake in Candy Digital
Sports retailer Fanatics has lost its taste for NFTs and is offloading its majority stake in Candy Digital.
The company plans to sell its 60% stake in Candy to escape what Fanatics executive chairman Michael Rubin called an “imploding NFT market,” CNBC reported Wednesday (Jan. 4), citing an internal email.
“Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business,” Rubin wrote. “Apart from physical collectibles (trading cards) that drive 99% of the business, we believe digital products will have more value and utility when connected to physical collectibles to create the best experience for collectors.”
The email says Fanatics will sell its interest to an investment group led by crypto dealer bank Galaxy Digital, but presumably for far less than the $1.5 billion it was valued at after raising $100 million in funding in 2021.
PYMNTS has reached out to Fanatics for comment.
Fanatics, recently valued at $31 billion, launched Candy Digital in 2021 to authenticate sports memorabilia and in turn validate valuations.
The company described Candy as a “next-generation digital collectibles company that brings together world-class digital artists, designers and technologists to develop a wide range of official NFTs.”
Fanatiker’s sales come amid what PYMNTS described late last month as a “strong and financially punishing” downturn for the NFT industry, with monthly spending on digital offerings plunging 87% to $442 million in the month of November.
At the same time, the volume of “stamped” NFTs has plunged by 60%, and the volume of active buyers and sellers is a third of the levels at the beginning of last year.
PYMNTS has noted the parallels between NFTs and Beanie Babies, collectible toys that were a popular item in the early 1990s before enthusiasm cooled at the end of the decade. NFTs were first created in 2015, rose in profile two years later, and now seem more like a fad than a trade disruptor.
“The staying power just isn’t there, as evidenced by the drastically subdued activities on the exchanges in the aforementioned statistics,” PYMNTS wrote. “The shelf life of the NFT and Beanie Baby cottage industry has been about five to seven years.”
Still, NFT advocates continue to champion their future. Speaking to the Financial Times in December, OpenSea CEO Devin Finzler said he believes consumers will continue to spend on digital images they can display in virtual rooms or at home.
“It is not necessarily the case that NFTs will always be bought and sold denominated in cryptocurrency as they are today,” he said. “There are a number of reasons why it makes sense in the current ecosystem, but as we become broader and more accessible, there’s no reason why NFTs can’t at least be denominated in US dollars.”
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