Buying Brand New Moments

Is there an advantage to buying Moments before the market is established?

Happy Holo Icon Day, Top Shot fam! We’ve been waiting for this legendary drop for what feels like months now, and the day has finally come. 2,500 lucky collectors will be going home with a Holo Icon pack, and the vast majority of us will be watching from the sidelines, ready to hit the marketplace.

Brand new Moments hitting the marketplace for the first time is one of my favorite aspects of Top Shot. Over the course of the first few hours, an interesting dance unfolds between sellers and prospective buyers, slowly establishing an agreed upon rate until a proper market is formed. I’ve always wondered: can snagging a Moment out of the gates before a market has been established be fruitful? It’s sure feels riskier, but are there opportunities to make some great purchases? Let’s find out.

To get a sense of how quickly an efficient market is formed, let’s visualize this relationship between listings and sales over time. As an example, let’s zoom in on the early marketplace activity for Steph Curry’s All-Star Game Moment from this earlier season.

This animation shows the first 3 hours of activity, highlighting sales in orange and listings in green. Initially there is very little relationship between serial number and price. With a limited number of other listings and very few sales, sellers don’t have much data to reference, and are taking shots in the dark. Over time, this relationship smooths out, and we can see a more proper serial-price curve being established by the market.

We can also see that sellers have a tendency to overprice Moments when there isn’t much information around other listings and previous sales, and this makes sense. If a seller is going to be wrong, they’re likely to err on the side of being a bit greedy. For this reason, the majority of early purchases look to be poor ones, often overpaying by about $500 - $1,000 compared to the market just 3 hours later.

So that’s just one Moment, but what about when entire sets of Moments hit the marketplace for the first time? Let’s dive into the data from the most recent Holo Icon drop and analyze the effectiveness of very early purchases.

Holo Icon 2: Early Activity

While we could make mesmerizing GIFs for all 30 Moments from the Holo Icon 2 drop, it’s much more effective if we come up with a consistent method for evaluating early purchases. Here’s the approach we’ll take:

1. For each new Moment, find the first 15 purchases

2. For each of these purchases, estimate the Moment’s fair market value (FMV) 12-hours later when the market is more fully established

3. Determine the net gain (or loss) on the purchase by comparing the purchase price to the FMV

How can we estimate FMV? Let’s consider the early purchase of the #76 Chris Paul All-Star Game Moment for $2,500, and examine the listings 12-hours after the drop. We can first consolidate the listings into true “candidate” listings by only considering the best serial for each price, and listings where you can’t get a better serial number for a cheaper price. A bit of a brain twister, so here’s a chart showing the initial purchase and the surrounding candidate listings:

Next, to estimate our Moment’s FMV, all we have to do is draw a straight line and see where we intersect the candidate listing curve. In our example that’s an FMV of $2,673, or a net gain of $173.

With a method for estimating Moments’ FMV in place, let’s go ahead and analyze the first 15 purchases of each Moment from the Holo Icon 2 drop, and calculate their net gains/losses! Here is a distribution of the results:

Note: LeBron James Holo Icon 2 excluded from analysis

Not surprisingly, we see a normal distribution with some reasonably long tails. On the aggregate, it does appear that these early purchases were fruitful for buyers, as the majority of purchases resulted in a net gain. More specifically, the median net gain was $141 or 7%. While this is quite a thin margin once you factor in the 5% marketplace fee, we have to remember that this is the median early purchase, and represents a run-of-the-mill sale. The best 10% of purchases were looking at a net (be it unrealized) gain of over 30% just 12-hours later.

Now, I’m certainly not saying early purchases are always wise. Consider the same analysis for the All-Star Game drop from earlier this season:

Woof. Nearly every single early purchase from this drop was regrettable, and I have flashbacks to this set’s prices plummeting as the initial hype from the drop died down.

It’s clear to me that each drop is unique and presents its own set of early purchasing opportunities. Look no further than that purchase on the right-hand side of the treacherous All-Star Game chart netting a profit of over $2k. If you’ve got a quick draw and are willing to splash around in the higher variance waters before a market has been established, early purchases might be just for you.

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So will you be heading to the Marketplace after today’s Holo Icon drop? I know I’ll be there if I’m not lucky enough to score a pack.

That’s all for this week! As always, I hope you enjoyed this article. Want to support the newsletter? The best way you can help out is by sharing it with a friend.

Disclaimer: None of the above constitutes professional and/or financial advice. All opinions expressed on Minted Moment are from the personal research and experience of the author, and are intended for educational purposes only.