Start the conversation
Nike Inc. (NYSE: NKE) is world-famous for its Air Jordan and other brands of sneakers and athletic apparel. Those products, of course, are why the company reported $10.9 billion in revenue last quarter and more than $44.5 billion in 2021.
Most folks, however, don't think of Nike as a Metaverse player, but as I'm going to show you today, it's making bold moves into this new, lucrative virtual space.
To be clear, I don't expect Nike to compete with, let alone displace, Meta Platforms Inc. (formerly Facebook). But unlike a lot of other companies dabbling in the Metaverse, Nike has the firepower to hang in there. It has loyal fans who will spend hundreds, even thousands of dollars on the brand - including its new Metaverse offerings.
Nike knows what we do: The Metaverse is expected to be worth $6.1 billion this year alone, and an estimated $13 trillion by 2030, if Citibank reports are to be believed.
Now Nike plans on padding its top line with a move into the Metaverse.
It's looking to dunk here, but I think investors could be in for a three-pointer...
Virtual Goods Are Worth Real Money
Nike's bold move has everything to do with non-fungible tokens (NFTs).
NFTs have actually been with us since 2017. These unique digital objects "live" on the Ethereum blockchain, where ownership, authenticity, and value are indelibly, inalterably recorded - forever.
Most folks know NFTs as art, but they can be used to lock in ownership of Metaverse real estate, and even virtual representations of everyday objects, like sneakers, of course, but also everything from cars to furniture.
In 2020, around $94 million worth of NFTs changed hands, but that was just the beginning.
They really exploded onto the markets in 2021, when digital artist Michael "Beeple" Winkelmann sold and NFT-based artwork called The First 5,000 Days at Christie's for a record $69 million. Since then, it's become commonplace for unique, sought-after NFTs to fetch six-, seven-, and even eight-figure prices.
Of course, many more digital artworks trade for anywhere from a couple of bucks to a few hundred dollars, on up into the thousands - the "bread and butter" of the global NFT market that's expected to hit $35 billion this year and $80 billion by 2025.
That growth potential is attracting some of the biggest names in business, not least of all Nike.
Coinbase Global Inc. (NASDAQ: COIN) recently opened up its own its NFTs marketplace to customers. OpenSea and Gemini's Nifty Gateway are other platforms for trading NFTs.
Adidas AG ADR (OTCMKTS: ADDYY), Pepsi Co. Inc. (NASDAQ: PEP), Anheuser Busch Inbev SA (NYSE: BUD), and Volkswagen AG (OTCMKTS: VWAWGY), to name just a few, have moved their valuable Adidas, Pepsi, Budweiser, and Lamborghini brands into the Metaverse via NFTs.
They're about to have company - and a run for their money...
Nike Has a Huge Advantage Here
Now Nike is moving into the Metaverse. It acquired RTFKT (pronounced "artifact") in December 2021 for an undisclosed price. RTFKT is one of the world's top NFT studios. Digital baron and Tesla Inc. (NASDAQ: TSLA) chief Elon Musk famously purchased a pair of RTFKT "cyber sneakers" for $90,000 last year, and some of the company's other offerings sell for between $500 and $100,000.
Nike and RTFKT plan to create "NIKELAND," a place where people can dress their "avatars" - digital representations of themselves - in all manner of Nike-branded gear. This gives Nike a new and potentially extremely lucrative digital revenue stream that many of its competitors haven't grasped yet. Nike has always done well with traditional advertising, with its catchy, durable "Just Do It" slogan and its "Jumpman" and "Swoosh" logos, but now Nike can use its Metaverse presence to boost its real-world profile and brand awareness well outside of these traditional channels.
And speaking of "traditional channels," Nike boasts 1,048 stores here in the real world. You can find its products nearly anywhere clothes, shoes, or sporting goods are sold. With Nike's move into the Metaverse, Nike expands that large footprint exponentially, virtually without limit.
What's more, the Metaverse is completely unaffected by the global supply and transport and logistics problems that have bedeviled consumer goods companies since the beginning of the pandemic. "Meta-merchandise" can be produced in the blink of an eye and "shipped" in milliseconds - no Panamax container ships required, and no "zero COVID" lockdowns, either.
This all bodes well for the company's stock...
These Shares Are Primed for a Fast Break
As I mentioned earlier, Nike's revenue in 2021 topped $44 billion, or 83% more than its nearest competitor, Adidas. NKE shares pay a dividend of about 1.12%.
As I alluded to a moment ago, Nike's management has been forthright about the supply and logistics issues it's faced since 2020, so that's baked in to the stock price. Thanks to the broader market sell-off, NKE shares are trading at just above 52-week lows. In effect, the stock can be had for around 21% less than this time last year and 40% less than its 52-week highs.
If, as some experts think, the global supply crisis is beginning to ease, Nike could conceivably make another run back to old highs, and its increasing presence in the Metaverse should give it the fuel it needs to soar beyond those.
Now then, a 40% surge is nothing to sneeze at, but commerce in and around the Metaverse is poised to truly skyrocket to as much as $13 trillion by the end of this decade.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.