Boom, Bust, or Both

A brief overview of the current state of trading cards and collectibles, the buzz around NFTs, and where we believe this emerging market is headed.

Over the last year I’ve been diving deeper into the trading cards and collectibles space to learn more about the buzz surrounding this emerging market. Sure, trading cards have been around for a while, but recent market indicators show that the buzz is here to stay. In the following piece I’ll touch on my personal POV as it relates to trading cards and their value, the new NFT model, and how I envision this space as a viable alternative asset for younger generations who want to invest somewhere other than Wall Street.

I. Two Types of People

When entering the world of trading cards and collectibles, it’s important to note the two types of audiences we’re seeing flock into this space. On one side of the spectrum we have the hard core collector who has been doing this for years and at the other end we’re seeing the financially savvy individual who is looking to make some quick cash. I think it’s fair to also note there is a huge market right in the middle who enjoy the process of breaking packs, the thrill of getting a hit, and collecting and/or reselling on platforms like Ebay or Mercari. Whichever persona you associate with, there are pros and cons to both and there is opportunity for everyone.

I would consider myself somewhere in the middle. I don’t expect to make a ton of money in the short term, but just like any other alternative asset, I’m playing the long game. While we’ll continue to see NFL, NBA, and MLB card prices soar, I’m getting into the soccer card scene for a couple reasons. Firstly, I’m passionate about soccer and follow the global game on a daily basis. Secondly, soccer cards aren’t as desirable right now, but will start to see an upward tick as we approach the 2022 FIFA World Cup in Qatar.

While only time will tell to see which of these audiences will net the highest returns, my advice would be to start where your passions lie. As you learn more, dive deeper, and start to uncover the trends in a given industry, or sport, the results will come if you do your research and trust your gut.

II. NFTs — what to watch out for.

NFTs or Non Fungible Tokens are simply a form of digital asset management that uses blockchain technology. In other words, it’s a way to prove the authenticity of a digital asset, track ownership, and ensure that the asset you own cannot be duplicated. We’ve seen this recently take off within the art and video communities (topshop) and we’re starting to see it take off with trading cards and collectibles.

While I wouldn’t consider myself an early adopter of cryptocurrency, I have been interested in the value it can provide as it relates to blockchain technology and authenticating ownership in a piece of something tangible. I’ve forayed into the scene using the app Dibbs.io, an app that lets you buy shares of a piece of memorabilia. Once admitted off the waitlist, I couldn’t help but start to uncover some of the pros and cons of these types of platforms.

You can make real money.

It’s no surprise people are making real money investing in cards, buying shares, and/or reselling on third party platforms. The hype is real and I do believe there is a long-term sustainability play on cards and collectibles emerging as a viable option for alternative assets. That being said, like any investment, there are risks involved and the price of cards typically fluctuate with team news, player updates, and injury status. It’s important to pay attention to these if you want to get in (or out) at the right time.

The Good.

Platforms like Dibbs.io do a great job at selling you on a particular card/player with their clean user interface and easy to understand market values. I particularly like that they have functionality around “Trending”, “Top Gainers’’, and “Top Losers” that give you a quick glance at how the market is moving. For the casual fan and savvy investor I think this is a great tool for evaluating market demand for a particular player or card in the near term.

The Bad.

Dibbs.io is effectively creating another layer of the market where they control supply and demand. They currently operate with a limited number of sellers and a long list of users looking to gain access off the waitlist, effectively creating demand for cards that will continue to go up in value. Who wouldn’t want to get in on that? But don’t be fooled by everything you see online. Right now, a 1986 Fleer Michael Jordan Card BGS 8.5 is valued at $27,999.94 on their platform. Yes, MJ will go down in history as one of the greatest players to ever play the game and sure, his cards will always have value, but is this card really worth that much? A great place to turn to figure out true market value for a card is Ebay or Mercari. Instead of purchasing a piece of his card on the Dibbs.io platform I found the same card (a PSA 10, arguably worth more) for $332 on Mercari. I bought it with the intention of selling in the future, but it made me think twice about how and why I should use a platform like Dibbs.io. For now, I think it’s a great place to evaluate market demand for a card, but not necessarily the best place to invest if you do your research.

The Ugly.

This use case made me think about the target market for a company like Dibbs.io and all the other NFT platforms popping up. Their value proposition is really around making it easier for unaccredited investors (people like me and you) to invest in cards and collectibles, which is great! The dark side of this (dare I mention Robinhood and Gamestop), is that it’s also a platform making it easier for people to follow the hype and invest in things that may not actually know much about. Only time will tell to see how companies like Dibbs.io continue to expand their user base without diluting the quality or credibility that they’re setting out to capture.

III. Where is the market headed?

I want to end with three high level trends to be aware of as we continue to monitor this industry. These are purely assumptions, but I know human nature and the biggest players will look to capitalize on a new emerging market.

As with all business ventures some companies will look to enter this market the right way and some will enter the market the wrong way. Businesses should be looking at how they can leverage this excitement to create sustained success that aligns with their long term business priorities. Technology as a driver of success is no new phenomenon, but the companies that look to deliver long term value around building an ecosystem of value-add functionality vs. the ones that merely creates a destination to engage in the short-term hype, will be the ones that really take off. The latter companies will be found out quickly.

Card companies are getting smart.

It’s hard to ignore the masses of people lining up at Walmarts and Targets around the country to snap up boxes and packs of NFL, NBA, MLB, and soccer cards. I’ve even gone as far as figuring out what day and time the cards get delivered by the distributor so I can snag a few boxes at retail cost. While card companies will continue to produce limited run, autographed, and Optic type cards, I do believe we will see more volume hitting stores soon. It would be smart for companies like Topps and Panini to cash in and sell as many of these boxes and packs while they can, but the success or failure of this approach will all depend on whether they choose quality over quantity. We’ll know more on this as the industry evolves.

What does long-term success look like?

Younger generations are looking to invest in culturally relevant tokens of nostalgia. Leaning on this idea of quality vs. quantity the trading card companies that can establish themselves as premium, culturally relevant, and innovative brands, will be the ones that take their game, and business, to the next level. While the hype is only beginning, expect to see trading cards, collectibles, and NFTs really start to take off in the near future.

Originally published at https://www.hitzzz.com on March 16, 2021.