sporting goods company Fanatics is shedding its stake in non-fungible token (NFT) company Candy Digital as confidence in the asset class wanes.
On January 4, it was reported that Fanatics, Michael Rubin’s sports company, has dumped 60% of its stake in the NFT startup.
Founded in 2011, Fanatics has become a household name in the sports retail and e-commerce industry. was estimated at 31 billion US dollars.
Nevertheless, The cryptocurrency bear market has hit the NFT sector hard in 2022, and it appears that Rubin’s firm is now looking to exit the “independent” NFT businesses.
Mike Novogratz’s Galaxy Digital-led investment group will buy a stake in Candy Digital. according to CNBC. In a letter shared by email, Rubin wrote:
“Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a stand-alone business.”
I confirm that Giving up ownership in Candy Digital “allowed us to ensure that investors could recoup the majority of their investment in cash or additional Fanatics shares.”
This is a favorable outcome for investors, “especially in the exploding NFT market, which has seen a sharp decline in both transaction volume and standalone NFT prices,” he added. According to Rubin, NFTs alone will not create much value.
“We believe that digital products will have greater value and utility when connected to physical collections to create the best experience for collectors.”
Fanatics acquired Topps Trading Cards for about $500 million in January 2022. After launching Candy Digital last year, it also acquired the rights to produce trading cards for Major League Baseball and then NFT.
Fanatics raised $700 million in fresh capital in December. The funding will be used for potential M&A opportunities in its collections, sports betting and gaming businesses. according to CNBC.
Candy Digital secured $100 million in funding in October 2021, bringing it to a $1.5 billion valuation.
Nevertheless, NFT markets have been significantly reduced in the crypto winter of 2022. According to market researcher Nonfungible.com: daily sales have fallen from over 100,000 sales in January 2022 to 15,000 today.
Cointelegraph reached out to Fanatics and Candy Digital for comment on the situation, but had not heard back by press time.
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