Bull Case Bear Case: Trae Young Photo-Matched Sneakers

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!

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‍2021 Trae Young Game-Worn & Signed Sneakers

Collectable

4/21 @ 12:00PM ET

Valuation: $34,000

‍Bull Case

• *Young* star, sustainable playstyle. Trae Young is still just 23 years old, and yet he’s a two time All Star starter as voted by the fans and one of the league’s most potent scorers. After a relative down season by his standards last year, Young has stormed back to form in 2021-22, averaging 28 points a game with his highest shooting percentages to date, while dishing out 9.7 assists, also a career high. Given his game is not based on explosive vertical athleticism, he seems like a prime candidate to continue improving and remain relatively unchallenged long-term by injury or deteriorating ability. To date, he has featured in 85% of all possible regular season games. 

• Collectable profile on the rise, seemingly with room to grow. Trae Young has seen the market for his high-end cards rise considerably over the last year. This time last year, his National Treasures RPA sold for $36k. Last weekend, it sold for double that amount. That value, though, still pales in comparison to the amounts paid for Luka ($266k), Zion ($594k), and Ja Morant ($312k) - we’re talking multiples lower. His Gold Prizm has sold twice this year, for $180,000 then $156,000. These are big sales, but again, on a relative basis, they don’t punch at the same weight at those other stars. It seems that high-end collector interest in Trae continues to rise, but that there’s a gap to other stars that’s not commensurate with performance, which creates a goldilocks environment of sorts for initiating a Trae position. A pair of Luka Doncic game-worn rookie sneakers photo-matched to three games sold in May of 2021 at Goldin for $28,800. While Luka has been more attractive to card collectors and those were rookie sneakers, the appreciation of Trae’s market, the volume of sneakers used by Luka, and the late 2021 sneaker market momentum provides some credibility to the valuation here. Of course, Luka’s rookie sneakers photo-matched to five games were bought out for $115,000 earlier this year, up from $82,000 at IPO. These Trae Young sneakers are photo-matched by MeiGray to two games last season in which he put up a total of 81 points and 15 assists.

• Adidas centerpiece. In a stable of Adidas NBA players that includes Damian Lillard, James Harden, Donovan Mitchell, and Derrick Rose, Trae Young looks primed to be the future centerpiece of the brand’s basketball efforts. He has already received his first signature sneaker, the Trae Young 1 - that’s something that Luka Doncic, Jayson Tatum, and Ja Morant are still waiting on. While reception has been mixed, the key “Ice Trae” colorway has, on occasion, sold for well in excess of resale price (as much as $100 more), indicating that there is some mainstream appeal. The energy behind the Adidas basketball brand may be bolstered by the partnership with Jerry Lorenzo and Fear of God, announced over a year ago. We’ve yet to see much basketball product from the partnership to date, but Fear of God is a widely-renowned streetwear brand with a track record of producing hyped sneakers in previous collaborations. Any increased excitement around Adidas basketball sneakers may bolster the allure of Trae’s sneakers, thereby making a precursor pair more significant.

Bear Case

• Challenged fractional sneaker performance. Through 4/19, the average ROI of sneaker memorabilia assets on Collectable is -6.87%. If you were to remove the returns on two bought out pairs that never traded, the average ROI would be -18.15%. Of seven assets currently trading, just two are positive. While this may not be an indication of the long term prospects of these assets or sneaker assets generally, it may be illustrative of a higher likelihood that prospective investors can achieve more attractive entry points on the secondary market. Additionally, outside of the Luka buyout, 2022 has not yet been a banner year for game-worn sneaker sales, with no non-Jordan banner auction sales to speak of. In fact, there hasn’t been a non-Jordan pair to sell at auction for more than the valuation here in 2022, with an array of Curry, Kobe, and LeBron pairs coming up short (though only the Curry’s were photo-matched). 

• No auction track record. To date, there has not been a public auction sale of a pair of game-worn Trae Young sneakers. While game-worn items can frequently change hands via private sale, the lack of public data points presents risk for prospective investors, who will be forced to make a decision in the absence of more precise comps (to the extent any game-worn comp is “precise”).  Luka data points are helpful but imperfect, and not necessarily favorable, given the Maverick’s heightened collectability versus the man he was effectively traded for.

• Unlikely to be an iconic sneaker model. The model here is the fun-to-spell-out Adidas N3XT L3V3L 2020. While it’s an edgy model in an edgier colorway, the sneaker was not particularly beloved by the public, and we don’t anticipate that we’ll be writing out “N3XT L3V3L” decades down the road to discuss the model’s impact on sneaker culture. In fact, it’s uncommon to find a pair selling for above retail price on resale markets StockX or GOAT, and more commonly, they change hands for under $100. This is by no means the end of the world when it comes to a game-worn pair, but it removes the additional bullish case of the sneaker model being culturally iconic or even hyper-relevant. Other pairs that would potentially be more significant: N3XT L3V3Ls in the "Ice Trae" colorway, Trae’s debut signature sneaker, or pairs from his rookie season.

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