Shares of the Chinese fintech Jiayin Group (JFIN 0.19%) plunged by more than 17% in the early hours of trading for no apparent reason, although it could be related to speculation regarding nonfungible tokens (NFTs).
NFTs are digital files such as art, video, audio, and other files stored on blockchain, which is the digital ledger technology that powers cryptocurrencies like Bitcoin (BTC 0.47%). Some NFTs have already sold for millions of dollars.
The Jiayin Group is not currently involved in NFTs in any way. The company runs an online individual loan marketplace that seeks to reach underserved customers in China. However, recent buzz on Twitter yesterday had people saying the company could potentially get involved in the NFT space, and shares surged 75%.
Although it is again unclear what caused the shares to fall, stocks that rose yesterday on NFT speculation have cooled off today since Tesla Founder Elon Musk poked fun at NFTs on Twitter last night.
Some NFTs have already sold for tens of millions of dollars, but this is still a new market in the very early days. Even after the dip today, shares of Jiayin are still up significantly over the last five days.
I expect NFTs will remain volatile for some time, so any stock linked to NFT speculation will likely do the same. Invest with extreme caution.