Shares of the Chinese online art platform Takung Art (TKAT -2.08%) were 12% lower as of 12:50 p.m. EDT on Wednesday after skyrocketing 23% yesterday.
Shares of Takung have been incredibly volatile this year, but overall are up more than 1,300% year to date. The main driver of the stock has been speculation by investors that Takung might jump into non-fungible tokens (NFTs), which are digital files such as art, video, and audio stored on blockchain, the digital ledger that powers many cryptocurrencies. Some NFTs have sold for tens of millions of dollars.
Takung, which runs an online platform that allows artists, art dealers, and investors to exchange and invest in artwork, has seemed like an ideal platform to sell NFTs, and it looks like it may finally be taking the plunge.
Yesterday, a regulatory filing showed that Takung plans to purchase 54,100 shares in the company Cultural Objects Provenance Holdings for $500,000. As part of the agreement, Cultural Objects will create an NFT platform for Takung for primary market sales and the launch of a physical exhibition with sales of collectibles using authentication technology, which is a big part of NFTs because it proves the legitimacy of digital files.
I'm actually surprised to see this stock trading down one day after this announcement by Takung that it is indeed wading into the NFT space.
But I've been advising against this company all year simply because of the volatility of NFTs and the difficulty to understand how much these assets are worth. Additionally, Takung has already had a massive run-up in its stock price, so I would really do some research on the company to see if the price is justified.