🔥 Should you catch the Charizard Master Set?
Hey all.
Ah, the ‘90s: the heyday of Tamagotchis, Beanie Babies and – a personal favourite – Pokémon. So if you’re feeling a little nostalgic, here’s an opportunity that should give your inner child a spring in their step: a Master Set of Charizard Pokémon Trading Cards from Share Strike.
As always, keep in mind that this isn’t investment advice, but rather a breakdown of the opportunity to help you make your mind up. So while we’ll give our opinion on whether the investment’s worth your while, be sure to do your own research as well.
🔥 The opportunity
Share Strike – a UK investment platform dedicated to trading cards – is giving you the chance to buy into a Charizard Master Set, a rare collection of 27 Charizard cards and 8 booster packs. They’re all PSA 10, meaning they’re in mint condition (PSA – the grading standard for trading cards – goes from 0-10).
The set was originally valued at £650,000, but it’s recently dropped to a not-to-be-sniffed-at £490,000. You can buy in for £500 a share with Share Strike, which will retain 35% of the shares itself. Then again, it’ll probably end up retaining a lot more than that at this rate: it’s only managed to raise £4,500 from 3 investors so far, leaving 98% of shares available at the time of writing.
🔥 The market
Pokémon is a mainstay of the entertainment industry, having started as an anime series in 1996 and going on to span video games, comics, books, movies, toys and, of course, trading cards. Those trading cards have become serious business in and of themselves, with a massive variety of them now in circulation, and collectors willing to pay top dollar for the rarest.
That much is clear from a glance at Card Ladder, which tracks the value of global sales of trading cards across eBay and card marketplaces PWCC and Goldin. The Pokémon card market climbed substantially in value between May 2004 and November 2016, rising 41% a year on average. But it’s since then that they’ve really taken off: they jumped 75% a year between November 2016 and April 2020, and 500% between April 2020 and March 2021 alone.
Trouble is, demand has dropped off since then. The market slipped 40% between those March highs and October this year, which goes some way to explaining why Share Strike slashed the price of the Charizard Master Set. It’s still only a small pullback in the context of the massive gains we’ve seen in the last few years, but it’s also been happening at a moment when high inflation has largely been benefitting alternative assets. Only time will tell, then, whether it’s a short-term correction or a sign of things to come.
If we zoom in on the Charizard character, we can see that it’s been following a very similar pattern: it rose 16% a year on average between May 2004 and November 2016, 75% a year between November 2016 and April 2020, and 700% between April 2020 and March 2021.
As far as why it follows the pattern so closely, that’s because the Charizard Character is to the Pokémon card market what Apple is to the Nasdaq: its massive market cap means its ebbs and flows have an outsized impact on the overall market.
🔥 The investment
To assess whether the Master Set is worth your investment, we combined three price points – the last sale price, the all-time high sale price and the Card Ladder value (in short - the last sale price plus or minus the percentage change in the relevant index since the sale)* – of each of the cards in the collection. Please keep in mind this data was collected over a period of 2 weeks and some “last sale” have low confidence i.e no recorded sales have been tracked for a long period of time. However, as these are generally the lower-valued cards they won’t have a significant impact on the overall picture.
That puts the collection’s all-time high at £663,000, its last sale at the £416,000 mark, and the Card Ladder value at £356,000 (due to the market dipping further since those sales). But dig a little deeper, and we can see that around half of the value in each instance is down to just one of the collection’s cards: the Base Set 1st Edition PSA 10, which hit an all-time high of around £360,000 back in May.
Since that high point, there have been three sales of this particular card – none of which have come anywhere close. The most recent public sale came in at £165,000 in August, while the card is currently trading at around £151,000 on US collectible investment platform Rally. We also spoke to a UK seller who sold his copy for £236,000 ($275,000) over the summer. In short, if one card is so heavily responsible for the value of the collection itself, its decline doesn’t bode particularly well for the Master Set.
*Note that in five cases, we had to use sales data for PSA 9 cards/ packs rather than PSA 10, so we estimated the value based on the PSA 10 within a comparable set. And in the one case where there was no PSA or ungraded data available, we used a recent offline sale as a reference.
🔥 The final verdict
This investment is an easy no for a multitude of reasons.
For one thing, the entry point is nowhere near competitive enough. The original entry price of £650,000 was, in a word, baffling: £13,000 shy of its all-time high, at a time when the wider market has fallen 40% since then. The new entry point of £490,000 is better, sure, but it still feels punchy given that the last sale price was £416,000 with the market in steep decline.
So we reached out to Share Strike to understand how they came to their valuation, and we were told that it was done by “looking at the last few sales and then adjusted based on factors like scarcity, rarity and exchange rate”. So far, so vague. And when we pushed on how much of the £490,000 valuation could be attributed to the Base Set 1st Edition, they opted to stay tight-lipped.
There’s your next problem: Share Strike itself. The company’s website isn’t particularly transparent, nor is it upfront about the recent decline of the category and the set itself. What’s more, the owner of Share Strike both owns and prices the collection, which doesn’t sit well with us. Consider that if he had managed to fully fund the Master Set at a £650,000 valuation, he would’ve sold it to investors for close to its all-time high, raising £422,000 for himself and leaving investors holding a very overpriced bag.
On the plus side, it looks like the Charizard Master Set won’t actually fund: there are only 31 days left on the clock, and as we mentioned earlier, Share Strike has only raised £4,500 from three investors. Here’s hoping it’ll be broken down into a single asset or a handful of them and offered at a more competitive price…
That’s all from us this week. Any investments you want us to look into? Let us know – and as always, don’t forget to spread the word about the newsletter.
The Relic Team