‘There’s never been a time like this’: Wall Street is stacking up in trading cards as prices soar

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In early February, a Michael Jordan beginner basketball card in pristine condition was sold for a record $ 738,000 at auction from Goldin’s company. The kicker? Exactly the same item went for nearly $ 215,000 a few weeks earlier.

“There has never been a time like this in the history of the company,” Goldin told CNN Business. “I’ll bet that for every person who wanted a Michael Jordan rookie card in 2019, there will be 100 [now]

The shock sale is part of a much larger trend in sports collectibles that also caught the attention of veteran investors small traders, who have turned card collecting from an ardent hobby into a big investment market. But the timing and magnitude of the price hike has also raised concerns that it could be fueled by the same speculative forces that recently sent bitcoin and meme shares. such as GameStop through the roof.

“This is now part of our culture,” said Goldin. “I wouldn’t get anywhere near the word bubble.”

The pandemic push

The renaissance of the trading cards has its roots in the pandemic. People stayed at home without live sports and started raiding their attics and basements and digging up old maps. They also sat down to watch “The Last Dance,” the documentary series about Jordan, the legendary former NBA star, which aired on ESPN.
Suddenly, celebrity-boosted trading cards were everywhere, ranging from actor Mark Wahlberg, whose kids started a fundraising business, to DJ Steve Aoki and Resy co-founder Gary Vaynerchuk. Videos of fans opening card decks on YouTube and TikTok turned into tens of thousands of views.
“This is a market where demand is growing, but which has no more supply,” Vaynerchuk, a longtime proponent of card investing, wrote on his website. last March. “That’s a recipe for opportunity.”
A fan holds up trading cards from Minnesota Timberwolves players ahead of a match on Feb. 3, 2020.

Prices for top quality cards with all-time greats have risen dramatically. Those with newer talent also increased as enthusiasts tried to scout the next big stars.

“Instead of betting on a game, people watch it and can bet on a career,” said Goldin.

The rise in prices has caught the attention of a broader class of investment professionals, who are in step with cash following unprecedented stimulus from governments and central banks. The lowest interest rates have also made it harder to find lucrative investments, spurring interest in creative alternatives.

“Funds are being created. They are engaging investors and pooling five, 10, 15 million dollars,” said Jesse Craig, director of business development at PWCC Marketplace, a top seller of premium cards.

Josh Luber, the co-founder of the sneaker resale startup StockX, left the company last year to found Six Forks Kids Club, an alternative asset management company focused on cards. The moment, he said, was just too great to pass up.

“It’s hard to find someone [in] my generation whose first company didn’t buy baseball cards when they were 10, “Luber, who is 42, told CNN Business. “We are all of the age that we have a little more money, but we are also in decision-making positions for investment funds.”

The advent of institutional money has rapidly changed the market. Goldin said for the first time in his career that he is handling calls from hedge funds interested in gaining exposure.

A takeover interest has also emerged, given the limited number of leading companies in the sector. Last month, Angel Investor Nat Turner and Steve Cohen, the billionaire hedge fund titan and owner of the New York Mets, announced that they were buying Collectors Universe authentication service in an $ 853 million deal, after reconciling a bid first made in November.

Not just Wall Street

It’s not just a lot of money that comes into play as the industry gets a financial makeover.

Fractional trading has also reshaped card trading, allowing everyday buyers to buy a small stake in a LeBron James or Patrick Mahomes card that would otherwise have been overpriced, in the same way people can now buy a piece of expensive stock like Apple AAPL and Amazon AMZN
The Michael Jordan 1986 Fleer rookie card, which sold for $ 738,000 in an auction that closed February 1.

“We realized that the potential fractional ownership should break through a huge barrier to entry,” said Ezra Levine, Collectable’s CEO, who buys sports cards and converts them into marketable assets registered with the Securities and Exchange Commission.

Collectable distributes individual cards on its platform through IPOs. The shares can then be bought and sold as if they were shares Microsoft MSFT or AMC Entertainment AMC

The company has completed approximately 40 IPOs since last fall and can boast impressive returns. A 1986 Jordan card that went public for $ 10 a share in October is now trading at $ 60 a share, while the share of a signed James card from 2003 is up 50% since late December.

Not everyone follows this route. Other hobbyists gather on social media as they break open new packs of cards, hoping they will include younger talent that can later be sold on eBay for a huge profit. Some make even bigger bets.

“I spent $ 9,000 on this,” one TikTok user said in a post this week, holding up a James rookie card. “Call me crazy, but I think this is going to hit 20K. Let’s go.”

Is it a bubble?

After Craig brokered the sale of a rare Mickey Mantle card to entrepreneur and actor Rob Gough for $ 5.2 million in January – hailed as the largest trading card sale in history – ask about a price bubble seemed valid.

Those in the business say prices could drop for some extremely popular items, like the rookies in Jordan, but they don’t think valuations are getting out of hand.

“I think trading cards are one of the most undervalued asset classes out there,” Luber said.

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He added that while the 1986 Jordan card valued faster than he expected, he doesn’t think the value is out of line with demand.

Everyone in the industry thinks it’s “a $ 1 million card,” Luber said. “But we all thought it was a year away instead of a month.”

Scott Keeney, who created a fund to invest in trading cards and companies like Collectable with venture capitalists Courtney and Carter Reum, is also optimistic. He thinks that in one to two years the prices charged by Jordan and Mantle cards will be much higher than they are now.

“We take all these other people coming in as more confirmation,” said Keeney. He declined to share how much his fund had raised, except that it was at least seven figures.

There are, of course, risks. As with investing in rare art or wine, there is the potential for fraud. The Washington Post has reported that the FBI is investigating tickets allegedly altered to improve their condition before being verified by Collectors Universe and auctioned on platforms such as PWCC.
The industry has also seen a price drop before, after over-zealous producers flooded the market in the 1980s and 1990s. When collectors discovered how many were in the system, cards from that era declined in value.

Goldin recognizes that prices will inevitably fluctuate. But he believes supply will remain under control, especially at the top end of the market.

The difference between cards and stocks [is] nobody likes a share, “he said.” Some people buying these cards to make them sell is like getting an arm off them. “

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