Remember the good old days?
Today we are going to delve a little into Topps NFT. Quite a fair bit to digest so I’ll go a little retro.
Remember the days of collecting basketball, soccer or baseball cards/stickers and trading them with friends? These physical cards can be worth a lot. In Feb 2021 this year, a 1986 Michael Jordan Fleer card (see image below) sold for a cool USD645,000.00 (including buyer premium) at Heritage Auctions.
And it is not just His Airness cards that are skyrocketing. Collectibles bought decades ago for just a dollar are fetching a sky high premium. The generation born in the 1960s – 1980s are at the stage of their lives with higher disposable income. They want that bit of history, that bit of excitement and perhaps a sense of nostalgia in buying those cards that reminded them of the past, that moment in their lives. Something they do not mind paying for.
The disruption of the collectibles world.
And now, even the collectibles world has been disrupted. We have platforms like NBA TopShots (nbatopshots.com) and Nifty Gateway (niftygateway.com) offering digital collectibles. YES, digital collectibles you can technically download/ printscreen and get the same video and image for free on your laptop. But you still want to pay a premium to buy them because:
- The digital collectibles are officially issued by the company licensed to produce it. You can relate this to a traditional game trading card world. You can do a high-quality photocopy of a prized card off your local printer but it still doesn’t count.
- The digital collectibles are limited in numbers (similar to the traditional game trading cards)
- Each of the the digital collectibles is “Non-Fungible”. Each of these cards are unique. They are assigned a “tokens” (a unique number ID). As a result, you can be specific about the exact collectible you own and a market value can be derived from it. Even if there are multiple digital NFT cards showing the same player, their mint number distinguish each of them.
Believe it or not, an NBA Top Shot NFT have recently sold for $387,600. It’s simply a video of LeBron James emulating a famous Kobe Bryant dunk. You can download the video for free and watch it on your laptop for eternity. But that’s not really how it works. In the collectibles world, you have to be recognised to be owning this collectible. It has to be bought from NBA Top Shot to count. Adding on to a new requirement coming from the digital world, it has to be non-fungible.
Big Opportunity for companies with collectibles IP and Copyrights
So now, you can imagine companies like Disney (DIS), Hasbro (HAS) all looking into NFT to unlock business value from their IPs (think Mickey Mouse digital collectibles). All they need to do is to create or jump onto a digital collectibles platform and start spinning off limited NFTs at low production cost. And this is what one company has done – The Topps Company, Inc.
The Topps Company, Inc. is an American company that manufactures chewing gum, candy, and collectibles. They are a leading producer of American football, baseball, basketball, soccer, and other sports and non-sports themed trading cards. And recently, they made their foray onto digital NFT via selling the MLB series.
The launch has plenty of hiccups due to server slowness but commercially, it was a hugh success. The launch fully sold out in 30 mins. A premium Series 1 MLB is listed (at time of writing) on the AtomicHub at 7 times the launch value.
A MLB Premium Pack released by Topps. It is selling at around $700 on open market.
A Topps MLB Keston Hiura collectible card listed on AtomicHub for $750.
What this means for Topps and Topps NFT
Topps is at the right place and at the right time with a digitally savvy generation warming up to NFTs. There is also a growing school of investors shifting towards collectibles as a form of wealth preservation. On the supply side, the cost of “producing” Topps NFT is low. The time-to-market is expedited without the need to ship out anything physically. There is no need to onboard new vendors, effectively cutting off the middlemen as well.
Topps is currently not a listed company but they have recently entered into the Special Purpose Acquisition Company (SPAC) play. Topps announced on 6th Apr that they will be merging with Mudrick Acquisition II (NASDAQ:MUDS) to eventually be listed on NASDAQ. As a result, they are targeting to eventually be listed under the ticker (TOPP) with the merger is planned to be completed in late Q2 or early Q3 2021.
The CEO of Topps is Michael Eisner, the former Chairman and CEO of The Walt Disney Company.
I have not gone too deep into the fundamental analysis of the merger but MUDS is worth looking at as a growth stock, when Topps NFT has just really started. The potential is certainly there and I’ll be happy to trade both their cards (physical and digital Topps NFT) and the company shares. Will consider making an entry if the price dips.