Bull Case Bear Case: 2017 Panini Flawless Shield Signatures Patrick Mahomes

Welcome to the latest edition of Bull Case Bear Case. As always, the goal is to give investors a clear, balanced view of both sides of the coin. Prepare to tackle the week with confidence! This week, we preview the 1954 Sports Illustrated #1 which will IPO on Rally. This marks the first ever fractional magazine.

Collectable

2017 Panini Flawless Shield Signatures Patrick Mahomes 1/1

4/28 @ 2:30 PM ET

Valuation: $1,990,000

‍Bull Case

• The million dollar Mahomes market. In January 2021, Goldin Auctions sold a Panini National Treasures Mahomes Black RPA for $840,000 which established a new record for any football card. The record was then shattered in July 2021 when PWCC brokered a private $4.3 million sale for a 2017 NFL Shield National Treasures 1/1 Mahomes Rookie. The card was sold to LJ's Card Shop in Ohio and still stands as the most expensive football card sale to date. With Mahomes and Tom Brady the only football players that have commanded seven-figure prices for their cards, the market for future million-dollar sales is already established. This million-dollar Mahomes card will have good company on Collectable as the platform already offered a seven-figure Mahomes, the 2017 Laundry Tag RPA which was offered at a $1.57 million market cap.

• Buyout potential. To date there have been 26 accepted buyout offers on Collectable and 8% of them have been Patrick Mahomes cards. Yes, there have only been two accepted Mahomes buyout offers but both yielded strong returns for investors and were accepted with commanding shareholder sentiment. The first ever buyout offer made to investors on Collectable occurred on November 24, 2020, The $182,500 offer was presented for a BGS 9.5 graded Panini Flawless Emerald Mahomes card. On a share-weighted basis, investors accepted the offer with 68% approval and the return from IPO settled at 33.6%. Then on January 30, 2022, investors accepted a $115,000 offer for a different 2017 Panini Flawless Emerald Mahomes. This Emerald Mahomes was offered with a $79,500 market cap and investors accepted the buyout for a 70% share-weighted vote for a total ROI was 38.25%

• Population = 1. While this is by no means a resurgence of the junk wax era, we are seeing a record number of cards being graded. One way to counter the onslaught of graded cards flooding the market is to invest in cards with a known and limited production. The best example of this is of course, one-of-ones. This Patrick Mahomes Shield RPA is the only example of its kind in existence and there will never be a comparable copy hit the market. While cards that are not one-of-one have the potential for volatility due to new graded examples hitting the market or comparable sales data, this card stands alone. This is now the third Mahomes 1/1 to be offered by Collectable and the platform is starting to build quite the empire of Mahomes rookies that have a numbered population. In a hobby that is being overwhelmed by newly graded cards, there is always a level of safety with one-of-ones.

Bear Case

• Collectable's secondary market for Mahomes cards. While buyout offers have provided a level of reprieve, the average return for Mahomes cards that are currently trading on Collectable's secondary is not stellar to say the least. There are four offerings featuring Mahomes rookies on Collectable's secondary market and all four are currently trading negatively with an average return of -36.2%. The "best" performing of the group is a basket of two Prizm Bronze Stars which are down -16% while the other three offerings have all dropped at least -28%. The other Mahomes card that was offered at a seven-figure market cap, the Laundry Tag RPA, is now trading at a $697,255 market cap and has fallen -55.8% since IPO. The trend has not improved recently at all either, as the Laundry Tag RPA has slipped 8.3% over the last month after falling below $500,000 in February. This card also comes in at a steep price compared to its purchase amount. The individual consigning the card through Collectable acquired it for $312,000 last year at Goldin and the offering amount is more than 6x the purchase price.

• The AFC is absolutely loaded. In what could be the strongest conference in NFL history, Patrick Mahomes finds himself in an AFC with Joe Burrow, Josh Allen, Justin Herbert, Russell Wilson, Deshaun Watson, and Derek Car. He will also need to traverse the 2022 NFL season without 3x All-Pro wide receiver Tyreek Hill, who was traded to the Miami Dolphins during the offseason. While Mahomes still has plenty of weapons around him including Travis Kelce and the newly acquired JuJu Smith-Schuster, the AFC is arguably the best it has ever been and it seems impossible to predict who will emerge from the group as the 2022-23 Super Bowl participant.

• Does grade matter for a one-of-one? It is one of the most controversial sides of the hobby. Does grade matter on a one-of-one? And more specifically, does a grade below a BGS 8 or a PSA 7 impact valuation? The card that Collectable will IPO actually has very impressive subgrades for three of the four criteria. With a 9.5 for surface and an 8.5 for corners, the card is visually appealing and is one of the cleaner Shield cards on the market. The issue though lies with the card's surface grade, which is a 6.5 and automatically makes the max grade this card could earn just a BGS 7.5. I carry the opinion that grade does not matter, but I also carry the opinion that a 1/1 should not be given a numerical grade in most cases. That said, having worked within the market and having followed the hobby for years, there are collectors who are put off by a modern 1/1 that does not earn at least a BGS 8 or 8.5. While that should not impact the market cap of the card on Collectable's secondary market, it could play a negative role in attracting a multi-million-dollar buyout offer.

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