Please ensure Javascript is enabled for purposes of website accessibility

NFT Speculation Has These Stocks Roaring Again

By Bram Berkowitz - Updated Mar 22, 2021 at 5:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Several Chinese stocks have soared in recent days due to speculation that they could jump into the non-fungible token space.

What happened

Shares of several Chinese companies are surging once again due to speculation that they might jump into the non-fungible token (NFT) space.

The Chinese fintech firm Jiayin Group (JFIN 2.83%) saw its stock price rise more than 77% today. Shares are up roughly 226% in just five days. Shares of the online art platform Takung Art Co. (TKAT 6.51%) climbed more than 65% today and have surged roughly 590% over the last five days.

Shares of the Chinese classical music platform Kuke Music Holding (KUKE -2.02%) climbed more than 11% today, while shares of the artwork e-commerce company Oriental Culture Holding (OCG 0.30%) rose more than 24%.

So what

Shares of all of these companies once again appear to be rising on news or speculation regarding NFTs. NFTs are digital files such as art, video, and audio stored on blockchain, which is the digital ledger technology that powers cryptocurrencies like Bitcoin (BTC 1.32%). Some NFTs have already sold for millions of dollars.

None of these companies are involved in the NFT space, but investors are betting that their current business models could allow them to easily make the transition.

A gold coin that says Non Fungible Token on it.

Image source: Getty Images.

For instance, Takung runs an online platform that allows artists, art dealers, and investors to exchange and invest in artwork, so you can see how that might be a company that could easily make the jump if it wanted to. Recently, a digital piece of art sold for $69 million.

"Buying the companies offering NFT would be like buying companies that have some sort of dealings with bitcoin in the early days," Kim Forrest, chief investment officer at Bokeh Capital Partners, recently told Reuters.

Forrest added that she thinks the surge is being led by people who feel they missed a huge opportunity by not buying cryptocurrencies like Bitcoin a few years ago.

Now what

Again, there is no confirmed news that any of these companies are actually jumping into the NFT space. Right now, the run-up in all of these stocks is being fueled by speculation on social media.

NFTs are also quite new and will likely be very volatile going forward. I would agree that the NFT climate feels similar to that of cryptocurrencies a few years ago. But cryptocurrencies have traded with lots of volatility over the last few years and continue to do so. There's also no guarantee that NFTs will run the same course as cryptocurrencies.

Remember, some NFTs are intended to mimic tangible assets like sports trading cards, a market that has soared up and down wildly for years. I would continue to advise extreme caution when investing in NFTs right now.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Takung Art Co., Ltd. Stock Quote
Takung Art Co., Ltd.
TKAT
$1.80 (6.51%) $0.11
Bitcoin Stock Quote
Bitcoin
BTC
$21,514.90 (1.32%) $279.78
Jiayin Group Inc. Stock Quote
Jiayin Group Inc.
JFIN
$2.18 (2.83%) $0.06
Kuke Music Holding Limited Stock Quote
Kuke Music Holding Limited
KUKE
$1.94 (-2.02%) $0.04
Oriental Culture Holding LTD Stock Quote
Oriental Culture Holding LTD
OCG
$3.38 (0.30%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.