Otis - Invest in Collectibles, NFTs, Shoes, etc

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Otis (https://www.withotis.com/) is a company that allows users to buy fractional shares of items that have cultural significance. This includes trading cards, shoes, books, art, NFTs, etc.

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How it works:

While it’s not exactly stocks, it functions in a similar way. There’s an underlying item that has an IPO at a certain price per share and a certain number of shares available. That establishes the market cap or value of the item. Usually this is based on recent sales of similar items (if available). Otis authenticates the item itself and interfaces directly with the current owner. Presumably they hold 51%+ of the shares, but I’m not 100% sure how that side of the process works.

After 30-60 days the item shows up in the Otis app for trading. From there, users can submit Bids to buy shares and Asks to sell shares. Just like stocks, when they match, a sale is made and depending on which is accepted, the price moves accordingly.

There are several differences between trading on Otis vs. traditional stocks:

  • Obviously, you’re investing in a physical thing not a company.
  • Liquidity is low and thus volatility is high (especially at IPOs).
  • There is an expectation that the item will get purchased at some point in the future - somewhat true for companies, but less common.
  • That means these are more for long term holds versus scalps
  • There are no options/warrants.

Regarding IPOs, generally for more highly desirable items there are limits on how many shares you can buy at one time (I guess you could make multiple accounts if you really wanted to). It varies, but I’ve seen it as low as 100 shares (usually $1/share) up to 1000 shares. I believe after the drop happens you could then buy as many as you wanted though. Drops occur in chunks usually and there haven’t been any in a month or two.

Strategy:

Planning to do a follow-up/edit to discuss strategy around these investments, if there is interest.

Full Disclosure:

Current investments (unrealized):

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Closed investments:

1987 Fleer Michael Jordan Card: Purchased at $10/share ($100), sold at $55 (-$45/-45%)
Meebit #12536 NFT: Purchased at $1/share ($54), sold at $76 (+$24 / +44%)

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There wasn’t really any interest here, but I am going to post more anyway in case anyone comes along and wants to discuss.

Random strategies from trading on Otis:

  1. There’s some really quick math you can do by looking at recent sales (Otis gives you these on comparables) and generally the IPO price is at a discount to the “real value.” So getting in early is important.

  2. Despite that, many do go down in price after the initial IPO. Usually, if the IPO gets bought out really quickly (The Harry Potter book listed above did) then it’s a good sign there’s interest. If the IPO goes slowly, it could mean a lack of interest and a selloff may occur if it eventually funds. This is what happened with the 1987 Michael Jordan card, that’s now slowly recovering back. A third option still is the Charizard card which I thought would be an EASY clap, and it ended up taking forever to get funded, yet is still slightly green now.

  3. My biggest takeaway from these is you should only invest in items you think are going to have high interest/liquidity. Things like the original X-Man comic would be a better investment than a random NFT in my opinion.

  4. Another strategy if you don’t want to hold it long is to scalp it for a set % gain right at the IPO launch. Many of these pop 20-30% in the first few hours of trading, especially those with high interest and higher priced comps.

At the end of the day, this is going to be more of a “fun” trading side-gig and probably not something you can expect to make tons of cash on. Here are some examples of sales made and the gains from IPO:

Halo 1 X-box game: Sold for $34.82/share on $10/share IPO (248% increase)
Mike Tyson Punch-out game: Sold for $25.58/share on $10/share IPO (155% increase)
X-Man #1 Comic: Sold for $123.89/share on $75/share IPO (65% gain)

That said, not every collectible sells quickly or at all, so with any investment there is significant risk.

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