🚀 6 Forces Contributing to the Trading Card Boom of 2020

If you’re here, you’ve likely read something about the recent resurgence of the trading card hobby — whether it was from Gary Vaynerchuk or Nat Turner or Logan Paul or somewhere in between.

The category has effectively exploded. At the top end, the ceiling on the market has been blown off with the valuable cards shattering prior records and selling into the millions. A LeBron rookie card sold for $1.8M in July and a Mike Trout rookie for $3.93M in August. Logan Paul just bought a sealed box of base set Pokemon cards for $200,000 and sold the packs to fans for $11,000 each (yes, those same packs you bought for $3 in the late 90s have appreciated 3500x — and yes, that’s 10x faster than $AAPL stock has appreciated in the same timeframe).

Taking a step back, PSA, the company best known for authenticating and grading the condition of collectibles, has a backlog of over a million card submissions — or close to a year delay, and their parent company, Collectors Universe ($CLCT) is trading at all time highs.

It’s also important to remember that cards are, by nature, limited in supply. Once a year ends, they stop printing that vintage of a given card. Whether tens of thousands of a certain card are in circulation, or it’s a rare card numbered to 25, scarcity is built in.

OK, so I’ve established a premise here — cards are having a moment. But the question is: why?

It’s easy to point to Covid — people who collected in their childhoods are now stuck at home digging though their garages out of boredom — but we’re working with a slightly more complex cocktail here. We’re in the middle of a perfect storm for the trading card market:

Sports Betting: On May 14, 2018, the Supreme Court removed the federal law that banned sports betting in most states. That, along with the rise of companies like FanDuel and DraftKings, fueled unprecedented access to sports betting. An industry that had historically lurked in the shadows was quickly coming into the light on a state-by-state basis. Gambling on sports and buying trading cards are very different streams, but aligning the concepts of sport speculation and money (for the masses) started here.

GaryVee: Gary Vaynerchuk, a massive influencer in the business and marketing space, has been preaching about sports cards as an investment opportunity since early 2019 (probably even earlier, but it seems like that’s when he really started to dig in). Gary has always been an advocate for finding accessible, low friction ways for anyone to build up their cash flow from scratch. From garage sales to sneakers, trading cards were a natural fit into his methodology. He was responsible for redefining cards as a worthy investment class, and coaching his audience up on how to responsibly approach the opportunity tactically. Gary laid the foundation of the current card market.

The Zion Effect: Zion Williamson was the most highly anticipated NBA prospect since LeBron James, period. Basketball fans had tracked Zion’s journey since he was 15 years old dunking on everything and everyone. When he was drafted first overall to the New Orleans Pelicans in 2019, dormant collectors were inspired to buy up his rookie cards in hopes his trajectory continues to parallel that of his phenom predecessor. That was the first wave of resurgence in the basketball sector.

This PSA 10 Contenders Rookie Ticket Zion Williamson Gold Autograph is currently listed for $250,000 on eBay

Nostalgia: Nostalgia and existing IP perform really well commercially — people pay top dollar to feel that feeling from those simpler times. We spent the past decade+ watching Marvel and Star Wars movies and playing Pokemon Go in AR. Sonic the Hedgehog was one of the top grossing movies of 2020. How does this apply to the card market? Nostalgia provides justification for larger-than-typical purchases and serves as a backbone for larger-than-expected markets.

Quarantine: OK, now we’ve set the scene. We’re quarantining in our homes with some extra free time — maybe we just watched the 2nd installment of The Last Dance and need to wait a week for the 3rd. “Wait, don’t I have some Jordan cards?” “I wonder what they’re worth now”. Dust off the old binder, dig up that smaller box with your favorite cards in the hard cases, and reset the forgotten password on the eBay account you used once to buy that Biology textbook in 2004, because now we’re cooking with gas.

Logan Paul: Time to light the match. Earlier this month, Logan Paul, a 25 year-old influencer with 22M Youtube subscribers and 18M Instagram followers, livestreamed an event where he opened a $200,000 box of Pokemon cards to 300,000 concurrent viewers. If you weren’t speculating wildly about the value of your card collection before, you are now.

Where do we go from here? I don’t know. It’s tough to recommend jumping into any market that has had an unprecedented run-up over the past 6 months, so if you’re interested in the card world, just take your time and watch from the sidelines for awhile. Set some eBay alerts, get acquainted with how auctions are going and what the actual transaction prices are shaking out at. I think collectors are proportionally still overvaluing the sealed pack/the unknown and maybe undervaluing the PSA-graded proverbial ‘bird in the hand’. Given that there’s a known constraint on the PSA review process and a low probability of success on a sealed pack, it seems like a better proposition to invest in specific athletes or characters you have a strong outlook on longer term. Something something something buy low sell high. Or hold forever.

But then again, there’s nothing like opening a fresh pack of cards.