is betting that the future of retail lies in the metaverse by scooping up a company that creates one-of-a kind virtual sneaker designs for savvy gamers.
Now, shoppers have flocked to digital fashion this year, numbers show, and the deal could be good for investors looking to cash in on one of the hottest trends today.
(NKE) has acquired RTFKT, a creator of nonfungible tokens, for an undisclosed amount, the company said Monday. An NFT can be anything digital that’s all its own—one of a kind, unique.
RTFKT uses gaming engines, NFTs, blockchain technologies, and augmented reality to create its footwear designs and digital artifacts.
Retail’s interest in the metaverse has gained this year as more consumers have bought one-of-a-kind goods online. The luxury digital-hybrid collectibles could be a $25 billion segment of a $300 billion NFT market by 2030, Morgan Stanley estimates.
“With increasing momentum into NFTs from major brands [Adidas has partnerships with the Bored Ape Yacht Club and
for example], the acquisition of RTFKT will give Nike a boost in the race to gain traction with NFT collectors and digital fashion enthusiasts,” Stifel analyst Jim Duffy wrote in a research note Tuesday.
Nike didn’t immediately respond to a request for comment. Shares were down 1.1%, to $165.07, in afternoon trading. Duffy rates the stock a Buy and has a target price of $213.
The RTFKT acquisition follows a string of trademark requests made this week that show Nike intends to make and sell virtual Nike-branded sneakers and apparel, according to documents filed with the U.S. Patent and Trademark Office.
Nike has explored virtual options before. In May 2019, the Jordan brand partnered with Fortnite, where characters wore Nike-branded sneakers. Nike has also had collaborations with the online gaming platform Roblox. In November, Nike opened Nikeland on Roblox; Nike describes Nikeland as “this bespoke world with the backdrop of its world headquarters and inside Roblox’s immersive 3-D space, building on its goal to turn sport and play into a lifestyle.”
Duffy notes there are risks, though, such as the trading regulation for virtual goods and increased protectionism that could affect future margins. Inflationary pressures also loom, he said—and are here to stay.
Share of Nike are up 18% year to date, with a total market valuation of more than $265 billion.
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