Troika Media Jumps on the NFT Bandwagon: Hot or Hype?

You may not be able to buy non-fungible tokens (NFTs) directly from your broker, but you can invest in some businesses involved in the NFT space. One of these businesses is Troika Media Group (NASDAQ:TRKA), which is deeply immersed in the digital goods market. Nevertheless, this has not resulted in a sustained rise for the TRKA share, and Troika’s shareholders may be vulnerable to large capital losses in 2023.

Based in New York, Troika Media Group offers digital marketing and branding. Troika acquired Converge Direct, LLC, a digital mass marketing and data analytics provider, for $125 million.

Thus, Troika Media Group is involved in a number of high-tech markets – but remember that Troika also has an NFT angle. Will this help or hurt the company’s bottom line? Only time will tell, but so far the results are not encouraging.

Troika Media Group launches an NFT Marketplace

Although the Converge Direct acquisition somewhat expanded Troika’s business model, Troika Media Group apparently sought to expand its horizons even further. Troika has thus boldly ventured into the NFT market.

First, Troika Media Group subsidiary Troika IO introduced Redeem NFT, a digital marketplace for luxury-enabled NFTs. Redeem NFT “lists a variety of rare luxury goods, including bags and wallets, shoes and accessories, and collectable artwork.”

In addition, Troika Media Group has integrated with the fintech company Circle Internet Financial, LLC, to provide blockchain-based payment infrastructure for Troika’s customers. This integration was intended to improve the “customer shopping experience for NFT consumers in the Metaverse.”

TRKA stock jumps, but then gets dumped

So, has Troika Media Group’s foray into the NFT space yielded positive results? It’s hard to say, as neither Troika’s last six-month financial press release nor the company’s Form 10-KT from that time mentions Redeem NFT. In fact, these documents do not mention NFTs at all.

Overall, it was a mixed fiscal picture for Troika Media Group during the six months ended December 31, 2022. Year-over-year (YOY), the company’s revenue rose 1,125% to $187.91 million. On the other hand, Troika’s net revenue loss increased by 53% to $9.58 million.

Meanwhile, TRKA stock recently rose above 80 cents, but then quickly fell below 25 cents. Troika’s investors should hope that the share price gets above $1 and stays there. Otherwise, the stock may be vulnerable to takedown warnings from Nasdaq Exchange.

Going forward, investors should expect Troika Media Group to demonstrate how Redeem NFT contributes to the company’s top and bottom line results. Admittedly, it is undoubtedly a tough time to run an NFT marketplace focused on luxury goods. In an era of high inflation, consumers are unlikely to focus on digital collectibles and luxury items. So, Troika Media Group will have to overcome this macroeconomic problem somehow.

So, Is TRKA Stock Hot or Hype?

Troika Media Group is a strong revenue grower. Nevertheless, the company must improve its results on the bottom line. In addition, Troika must show positive financial results from its investment in the NFT area.

Until there are reasons to believe otherwise, Troika Media Group’s luxury product-focused NFT marketplace doesn’t look like a winning bet. Accordingly, TRKA stock appears to have risen on hype and quickly lost momentum. It’s not a must-have right now.

At the date of publication, David Model did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.