2 min read

Topps scores MLB NFT deal (I was wrong about $MUDS)

Topps scores MLB NFT deal (I was wrong about $MUDS)

Topps x MLB x WAX is a home run, imho.

So, the speculations had truth... Topps has just announced partnering with the WAX blockchain to release its first official Major League Baseball (MLB) non-fungible tokens (NFTs). Read about it here.

Given this recent development, I will admit my previous skepticism in this speculation wasn't exactly justified. But, the good news is, it's NOT too late to make a move... it's still the early innings 😉 (and I ain't stubborn).

As I mentioned in my previous letter, the valuation of Topps appears to be fair; but let's take a little deeper dive.

Based on the above, it's fair to expect Topps to carry a 2.5x revenue multiple, giving us a price per share of $15.00 – which at it's current price of $11.50, presents an immediate 30% upside.

This is, of course, a very basic/high-level calculation, but the real bet here is on the NFTs (or Digital S&E).

Dapper Labs, the company behind NBA Top Shots, is reportedly being valued at $2.5 billion.

NBA Top Shot has done nearly $500 million in sales with more than 800,000 accounts — 338,000 of which currently hold a NFT.

Dapper Labs (and NBA) earns an undisclosed amount each time an NFT is traded (on the blockchain) in the resale market – which can prove to be very lucrative for licensees, like Topps and Dapper Labs, if this is indeed the future.

I am nearly certain that Dapper Labs has a ludicrous valuation attached to it. And with that assumption, I am now willing to take a position in Topps.

I'm in Topps warrants ($MUDSW)

The warrants for Topps ($MUDSW) is currently trading with a 5x leverage ratio. If this deal/merger doesn't happen this can be worthless, but I'm willing to take that risk on a Definitive Agreement and with a smaller position in my portfolio.

If NFTs prove to be nothing but hype, I'll have warrants in a legacy card company (at a fair valuation) ...not the worst case 🤷.

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