Fanatic sells a 60% stake in Candy Digital because the “NFT market is falling apart.”
Fanatics, a company that sells sports gear, is selling its stake in Candy Digital, which makes nonfungible tokens (NFTs). This is because fans are losing faith in this type of asset.
On January 4, it was said that Michael Rubin’s sports company, Fanatics, was selling its 60% majority stake in the NFT startup.
Fanatics was started in 2011 and is now a well-known name in sports merchandise and online shopping. It is worth $31 billion.
Candy Digital started selling MLB ICON Leadoff NFT Collectibles in April 2022. From: MLB
But the crypto bear market in 2022 has been hard on the NFT sector, and Rubin’s firm seems to be moving away from “standalone” NFT businesses.
CNBC says that the Candy Digital stake will be bought by an investor group led by Novogratz’s Galaxy Digital. Rubin wrote in an email that was sent to the outlet:
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“Over the past year, it’s become clear that NFTs aren’t likely to be able to stand on their own and make money.”
He said that selling Candy Digital “allowed us to make sure that investors could get most of their money back in the form of cash or more shares in Fanatics.”
This was good news for investors, “especially in an imploding NFT market where both the number of transactions and prices for standalone NFTs have dropped sharply,” he said. Rubin said that NFTs on their own wouldn’t bring in much value.
“We think that digital products will be more valuable and useful when linked to physical collectibles, which will give collectors the best experience.”
Fanatics bought Topps trading cards in January 2022 for about $500 million. Also, after the launch of Candy Digital last year, it bought the rights to make Major League Baseball trading cards and NFTs.
In December 2022, Fanatics received $700 million in new funding. CNBC says that the money will be used for possible mergers and acquisitions in its collectibles, sports betting, and gaming businesses.
Candy Digital got $100 million in funding in October 2021. At the time, the company was worth $1.5 billion.
However, during the 2022 crypto winter, the NFT markets shrank significantly. The Nonfungible.com market tracker shows that daily sales have dropped from more than 100,000 in January 2022 to about 15,000 today.