Trying to figure out how to invest in cryptocurrencies can be a challenging endeavor for most market participants. The industry is still new and undeveloped, and it is extremely volatile. Furthermore, investors aren't able to conduct the same type of analysis on digital assets that they would on stocks.
So, if you're not yet ready to jump fully into the cryptocurrency world, you might consider investing in Walt Disney (DIS 1.54%), Nike (NKE -0.18%), and Starbucks (SBUX -0.35%) -- three familiar companies that are pushing to introduce Web3 features into their business models.
Disney
RJ Fulton (Walt Disney): Although you may not think of Disney as an innovator, the entertainment giant is slowly but surely building out its vision to prepare for the future of Web3.
The term "Web3" is still slightly vague, because its true potential still hasn't been fully realized, but it's typically used as an umbrella term including things like non-fungible tokens (NFTs), the metaverse, and cryptocurrency. Disney is well aware of the potential that Web3 has to offer; Chief Executive Officer Bob Chapek put it best when describing it "as the next great storytelling frontier."
Over the past year, it's become clear that Disney is all in on Web3 and what it has to offer. Every year it selects a small group of companies to receive time, funding, and guidance in what's known as the accelerator program. Disney's aim is to partner with up-and-coming companies that are on the forefront of innovation and whose businesses potentially align with its future goals.
The list of inductees this year is loaded with companies leading the evolution of Web3. All six members of the 2022 accelerator program specialize in things like NFTs, augmented reality (AR), the metaverse, artificial intelligence, and blockchains. One of the most noteworthy members that you might be familiar with is Polygon (MATIC 2.39%), the blockchain that makes Ethereum transactions cheaper and faster.
If you're looking for exposure to Web3 without trying to guess which cryptocurrency or blockchain will star in the next age of the internet, look no further than Disney. Due to its proven history of success and as one of the most well-known brands in the world, the company offers a low-risk/high-reward opportunity not often found in this sector. Although its stock is down more than 40% in the past year, Disney looks inexpensive when accounting for the future trajectory of the entertainment titan.
Nike
Michael Byrne (Nike): Nike is a great example of a company taking its real-world popularity and using it to plant its flag in Web3. Nike is dropping limited quantities of highly sought-after Nike and Jordan brand sneakers and using them to build up hype in the metaverse. For example, in December 2021, Nike acquired RTFKT (pronounced "artifact"), a metaverse-native brand that creates digital collectibles for an undisclosed sum. In July, RTFKT and Nike released the RTFKT x Nike AR Genesis hoodie, which doubled as a physical and digital item and was only available to holders of CloneX NFTs and CryptoKicks sneakers, creating a level of exclusivity.
This is far from Nike's only foray into the metaverse. Nike maintains a metaverse property called "Nikeworld" on the Roblox platform; it has released the aforementioned CryptoKicks and MNLTH (pronounced "monolith") NFTs.
These aren't just pie-in-the-sky ideas to generate publicity. Because NFTs are programmable, each secondary sale on a site like OpenSea triggers a 10% creator's fee, meaning that Nike can generate a considerable sum of revenue from each of these items over and over again with each sale. Prices are down from their peak, but right now, CryptoKicks on OpenSea have a floor price of 0.61 Ethereum, or about $800, and MNLTHs have a floor price of 2.58 ETH, or about $3,500, meaning that Nike can receive a cut of $80 or $350, respectively, each time a pair of CryptoKicks or a MNLTH changes hands. If the CryptoKicks or MNLTHs stay popular and change hands many times over the years, this creates a nice stream of recurring payments for Nike, which doesn't have to do much after the NFT is created.
To be clear, Nike had $44.5 billion in revenue in 2021, and the nascent metaverse opportunity is just a small part of its overall business. But Nike is a great example of a company that's entering the metaverse in a smart way, and using it both to bolster its brand's popularity and to create new revenue.
Starbucks
Neil Patel (Starbucks): Many successful consumer-focused brick-and-mortar businesses could enter the Web3 space by leaning on their existing digital offerings to bring new experiences to their customers. That's exactly what coffeehouse giant Starbucks is doing, with the introduction of Starbucks Odyssey, a new Web3 community for Rewards members and associates.
Members can earn, buy, and trade NFTs that can be redeemed to "unlock digital, physical, and experiential benefits that are uniquely Starbucks," said Brady Brewer, Starbucks' chief marketing officer. These include things like a virtual class on making espresso martinis, and an invitation to special events at Starbucks Reserve locations.
I am optimistic about the success of this initiative to draw more customers into Starbucks' ecosystem. My confidence comes from its incredibly successful loyalty program, which today has 27.4 million 90-day active members. That's already a sizable audience for Starbucks Odyssey -- one that is digitally savvy and understands how to navigate and use the company's Rewards platform.
Management recently laid out its Reinvention Plan, with the goal of achieving (at the midpoint) same-store sales growth of 8%, revenue growth of 11%, and earnings-per-share growth of 17.5% annually through fiscal 2025. The company took note of how customers' behavior toward the brand shifted because of the pandemic, and now its focus is on being more convenient and accessible.
It became obvious to the leadership team that Starbucks' standing as a "third place" -- somewhere to spend time outside of the home or the office -- was weakening. Therefore, Starbucks Odyssey, hoping to become this third place in a digital realm, should help to strengthen the company's already powerful connection with its customers. Utilizing a blockchain built by Polygon, it's slated to launch later this year.
Shareholders should cheer this latest development, which thrusts the business into the Web3 space. Not only does it prove just how forward-thinking and innovative Starbucks is, but it can also support higher sales and profit growth over time. And ultimately, this could lead to outstanding gains for investors.
