Sports memorabilia retailer Fanatics has sold its 60% stake in Candy Digital, it confirmed overnight, having part set up the NFT firm in mid-2021.
The sale to the other partner in the joint venture was announced in an internal email to staff, seen by CNBC, where executive chairman Michael Rubin suggested that “NFTs are unlikely to be sustainable or profitable as a standalone business”.
Candy Digital is now majority owned by investor Galaxy Digital (TSX-V:GLXY), the other co-founding company.
Rubin suggested the decision to offload Candy Digital was “rather straightforward,” as the excitement bubble around NFTs burst over the past year, with the value of most tokens having fallen.
In light of this, Rubin said: “Divesting our ownership stake at this time allowed us to ensure investors were able to recoup most of their investment via cash or additional shares in Fanatics.”
He added the sale was “a favourable outcome for investors, especially in an imploding NFT market”.
Candy Digital had been valued at US$1.5bn in October 2021, but it is unclear how much Fanatics received for the transaction.
The sports apparel and collectables company suggested it was looking to expand into additional business lines in December.
A fundraising round which concluded late last year saw the company raise around US$700mln, taking its value to US$31bn and leaving it with some US$2bn in cash.
It is expected to move into sports betting, as well as media and ticketing this year, according to sources who spoke to Reuters.