Troika Media Jumps on the NFT Bandwagon: Hot or Hype?

Stock Market

You might not be able to buy non-fungible tokens (NFTs) directly from your broker, but you can invest in some businesses that are involved in the NFT space. One of those businesses is Troika Media Group (NASDAQ:TRKA), which is deeply immersed in the digital-goods market. Yet, this hasn’t resulted in a sustained rally for TRKA stock, and Troika’s shareholders may be vulnerable to steep capital losses in 2023.

Based in New York, Troika Media Group provides digital marketing and brand-building. Troika acquired Converge Direct, LLC, a digital mass-marketing and data-analytics provider, for $125 million.

Thus, Troika Media Group is involved in a number of high-tech markets — but bear in mind, Troika also has an NFT angle. Will this help or harm the company’s bottom line? Only time will tell, but so far, the results aren’t encouraging.

Troika Media Group Launches an NFT Marketplace

Although the Converge Direct acquisition expanded Troika’s business model somewhat, Troika Media Group apparently sought to broaden its horizons even further. Thus, Troika has ventured boldly into the NFT market.

First, Troika Media Group subsidiary Troika IO introduced Redeem NFT, a digital marketplace for luxury asset-backed NFTs. Redeem NFT “lists a number of rare luxury goods including handbags and wallets, shoes and accessories, and collectable art pieces.”

In addition, Troika Media Group integrated with fintech firm Circle Internet Financial, LLC, to provide blockchain-based payment infrastructure for Troika’s clients. This integration was intended to enhance the “customer purchasing experience for NFT consumers in the Metaverse.”

TRKA Stock Jumps, But Then Gets Dumped

So, has Troika Media Group’s foray into the NFT space yielded positive results? It’s hard to tell, as neither Troika’s most recent six-month financial press release nor the company’s Form 10-KT from that time mentions Redeem NFT. In fact, those documents don’t mention NFTs at all.

Overall, there was a mixed fiscal picture for Troika Media Group during the six months ending Dec. 31, 2022. Year over year (YOY), the company’s revenue soared 1,125% to $187.91 million. On the other hand, Troika’s net earnings loss widened 53% to $9.58 million.

Meanwhile, TRKA stock recently leaped above 80 cents but then quickly dropped below 25 cents. Troika’s investors should hope that the share price gets above $1 and stays there. Otherwise, the stock could be vulnerable to delisting warnings from the Nasdaq exchange.

Going forward, investors should expect Troika Media Group to show how Redeem NFT is contributing to the company’s top- and bottom-line results. Granted, it’s undoubtedly a tough time to run an NFT marketplace that’s focused on luxury goods. During a time of elevated inflation, consumers aren’t likely to focus on digital collectibles and luxury items. So, Troika Media Group will have to overcome this macroeconomic issue somehow.

So, Is TRKA Stock Hot or Hype?

Troika Media Group is a powerful revenue grower. Yet, the company needs to improve its bottom-line results. Plus, Troika must demonstrate positive financial results from its venture into the NFT space.

Until there are reasons to believe otherwise, Troika Media Group’s luxury-products-focused NFT marketplace doesn’t look like a winning venture. Consequently, TRKA stock appears to have rallied on hype and quickly lost momentum. It isn’t a must-own right now.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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