Fanatics, the sports merchandise firm, is divesting its stake in Candy Digital, an NFT company, as its confidence in non-fungible tokens drops. Fanatics is owned by Michael Rubin.
Fanatics announced on January 4 that it was offloading its 60% stake in the NFT company. Fanatics started in 2022 and it has established itself in sports merchandising. The company is valued at $31 billion.
The NFT industry was hit hard by the crypto bear market of 2022, and Fanatics seems to be moving away from “standalone” NFT businesses.
In an email shared with many outlets, Rubin wrote:
“Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business.”
According to Rubin, divesting the company’s ownership in Candy Digital “allowed us to ensure investors were able to recoup most of their investment via cash or additional shares in Fanatics.”
This favored investors “, especially in an imploding NFT market that has seen precipitous drops in both transaction volumes and prices for standalone NFTs,” Rubin added. According to him, NFTs alone could not create much value.
“We believe digital products will have more value and utility when connected to physical collectibles to create the best experience for collectors.”
Fanatics bought Topps trading cards in January 2022 for about $500 million. It was given the rights to produce the Major League Baseball trading cards and NFTs after the launch of Candy Digital last year.
The company also raised a capital of $700 million in December last year. The funds will be used to finance the merger and acquisition activities of the company, across NFTs, gaming businesses, and sports betting.
Candy Digital on the other hand secured funding of $100 million in October 2021, valued at $1.5 billion. However, the value of NFT markets dropped significantly during the 2022 crypto winter. Data obtained from Nonfungible.com shows that the daily NFT sales volume has reduced from more than 100,000 in January 2022 to about 15,000.
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