You could argue that 2 years of huge investment in NFT markets was reckless. We’ve seen many layoffs and failures in recent months in many of the most popular NFT ideas. Many of these investments were made without any productization or actual work. Businesses looking to invest in these companies need to have higher standards and be able to see the potential benefits of projects that are already in development. The days of speculation are gone.
CNBC obtained an internal email indicating that Michael Rubin’s platform for sports, Fanatics, is selling 60% of Candy Digital’s NFT company to an investor group headed by Galaxy Digital. Mike Novogratz, a crypto merchant bank, was involved in the sale. Fanatics previously owned a majority stake in Candy Digital. This sale is due to the general downturn in cryptocurrency markets, which has had an impact on companies like Candy Digital and Dapper Labs.
Team Fanatics –
Happy New Year. I hope you had the chance to relax and spend quality time with your family and friends over the holidays. And that your 2023 year is off to a great start.
We’re slowly getting back on track, so I wanted to share some good news with you all. Fanatics has sold our roughly 60% stake in Candy Digital. Galaxy Digital, our original founder shareholder, has sold our stake in the NFT company. We made this decision after considering all factors. This was for many reasons.
Business Model- NFTs will most likely be an integrated product/feature, and not a separate business. It has been clear that NFTs are unlikely ever to be profitable or sustainable as a standalone company. Apart from the fact that trading cards drive 99% of the business’s revenue, we believe digital products have greater value and utility when they are connected to physical collectibles. This will create the best collector experience possible. We already have a wider and more important set of NFT and other digital collectibles rights in our Fanatics Collectibles company. This includes our trading card rights (NFL and MLB), and we are seamlessly integrating them with the top-quality physical collectibles rights. Our ultimate goal is to increase the number of collectors of sports. The best way to build emotional resonance and long-lasting success for NFTs is to connect physical and digital collectibles.
Investor Relations: Taking this immediate action is not only a smart move for Fanatics’ strategic direction, but it also helps us maintain our integrity with our investors. Candy’s investors bought into the vision because of Fanatics’ track record. Your hard work and collaboration on the mission of building the world’s leading digital sports platform is the reason for this proven track record. We had to ensure that their investment was protected in the event of changes in the market or financial environment. We sold our ownership stake to investors at this point. This was a good outcome for investors in an imploding NFT marketplace that has seen dramatic drops in transaction volumes and prices for standalone NFTs.
Cultural Integration We move even faster when things don’t work. One Fanatics…Win as a Team is a core value that drives our success. It only works when all our colleagues and teams can contribute their collective intelligence and expertise. We were unable to fully integrate Candy into the Fanatics culture and environment due to competing goals and objectives. We are proud of our culture of building, growing, and winning together as a company. This is due to shareholders with competing goals and objectives.
Fanatics Collectibles is 100% certain that this was the right long-term decision. We look forward to expanding our trading card and digital business under Fanatics Collectibles.
All the best for the new year!
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