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3 Overvalued NFT Stocks to Avoid

3 Overvalued NFT Stocks to Avoid

Posted On April 27, 2021 3:42 am
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The excitement among investors around non-fungible tokens (NFT) has exploded this year, with enthusiasts spending big sums of money on artwork and other digital items. NFT systems usually rely on the Ethereum Blockchain. The NFTs are attached to brands or even people that are expected to gain in the coming years. Ranging from tech websites to TV networks, NFT’s are gaining popularity in every industry. However, there is little doubt  that the latest NFT craze is fueled by speculators and not enthusiasts.

Non-fungible tokens are digital assets that represent a wide range of unique tangible and intangible items, from collectible sports cards to virtual real estate and even digital sneakers. But behind the positive picture of this blockchain game lie quite a few risks. Confusing hype, the whims of rich collectors, and the potential for fraudulent actors could add to investors’ risks  in the budding space. The NFT marketplace is one which has both the potential for incredible success and catastrophic losses.

As such, we believe overvalued NFT stocks Hall of Fame Resort & Entertainment Company (HOFV – Get Rating), Cinedigm Corp. (CIDM – Get Rating), and Liquid Media Group Ltd. (YVR – Get Rating), which  are caught up in the frenzy, should be avoided now.

Hall of Fame Resort & Entertainment Company (HOFV – Get Rating)

Established in 2020, HOFV is a leading sports, entertainment, and media enterprise headquartered in Canton, Ohio. The company is the result of a merger between HOF Village, LLC., a partnership between the Pro Football Hall of Fame and Industrial Realty Group (IRG), which began in 2016, and Gordon Pointe (GPAQ) Acquisition Corp.

In April, HOFV announced its first non-fungible tokens (NFTs) offering in partnership with Dolphin Entertainment, Inc. (“Dolphin Entertainment”) (NASDAQ: DLPN) and Elite Holdings LLC (“Elite Holdings”), the entity, which owns H2H. The companies plan to develop, market, promote and sell NFTs associated with the H2H Legends. The unique content should help them generate e fan engagement opportunities across their business verticals.

HOFV’s forward EV/Sales currently stands at 13.01x, 656.8% higher than the 1.72x industry average. The company’s 14.49x trailing-12-month Price/Sales  is 816.3% higher than the industry average 1.58x.

Although HOFV’s revenue grew by 4% year-over-year in the fourth quarter, ended December 31, 2020, to a value of $1.8 million, it  reported a $14.6 million net loss . Its adjusted EBITDA came in at a negative of $6.5 million over the same period. The stock has declined 29.8% over the past nine months.

HOFV’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which translates to Strong Sell in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

HOFV is also rated an F in Stability, and a D in Growth, Value, and Quality. Within the F-rated Travel – Hotels/Resorts industry, it is ranked #19 of 19 stocks.

To see additional POWR Ratings for Momentum and Sentiment for HOFV, Click here.

Cinedigm Corp. (CIDM – Get Rating)

Formerly known as Cinedigm Digital Cinema Corp, CIDM is the leading independent entertainment studio in North America and is widely recognized for its film/TV/digital production, digital cinema, OTT channels, and content and marketing distribution. It operates through two segments–Cinema Equipment Business and Content and Entertainment Business.

This month , CIDM announced a digital content partnership with Genius Brands International (GNUS) for its extremely popular Kartoon Channel! The company’s content offering will be found on all the platforms currently distributing Kartoon Channel! This partnership should  be an ideal deal for CIDM because  it will help it showcase premium content and gain more viewers.

The company’s forward EV/Sales currently stands at…

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