Bull Case Bear Case: 2020 Topps Dynasty Max Verstappen Triple Patch Auto

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.

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2020 Topps Dynasty Max Verstappen Triple Patch Auto (BGS 9.5)

Rally

5/5 @ 12:00PM ET

Valuation: $32,000

‍Bull Case

• The meteoric rise of F1 and F1 collecting.  Formula 1 is experiencing rapid audience growth, particularly in the US. Average viewership in the 2021 season was up 54% over the 2020 season average. Despite that already incredible growth, the start to 2022 continues to look incredibly bright. Viewership of the first two races of the 2022 season was up 47% over the full 2021 season average and 52% over the 2021 season’s first two races. The combination of easily-discoverable broadcasts on ESPN and Netflix’s Drive to Survive series have attracted new audiences, and importantly, younger audiences. The sport’s remarkable rise in popularity has translated heartily to the collectible world. There were 11 five-figure Formula 1 card sales at Goldin in the first quarter of 2022, up over 5 in the fourth quarter (and compared to zero F1 card sales of any kind in 1Q21). The sport’s record sale has risen from $59k in August, to $312k in March, and now to the $900k paid for Lewis Hamilton’s 2020 Topps Chrome Superfractor. ‍

• A young F1 star primed for greatness. Max Verstappen is, of course, the reigning Formula 1 World Champion. In fact, for as long as most newcomers to F1 have been following the sport, Verstappen has been fiercely competitive - both on a race-by-race and seasonal basis. Emphasis on fiercely; Verstappen is an aggressive driver with nonexistent willingness to bend to other drivers on track, often imposing his own will instead. At age 24, Verstappen already ranks 14th all time in Grand Prix wins with 22. Last season, he won 10 races. If he were to win at that rate for the next three seasons (no small task), he would find himself in the top 5, just 1-2 wins from third. While that still leaves him significant work to do to catch Hamilton and Schumacher, with 103 and 91 wins respectively (along with seven championships apiece), the early stages of his career have been remarkable. He’ll face future competition from the likes of Leclerc, Norris, and Russell, but he currently stands out as the likely highest achiever in the bunch. Notably, Verstappen is the youngest driver to debut in Formula 1, as well as the youngest to win a Grand Prix.

• Early premium card. While not necessarily a “rookie” in the truest sense, the card represents exposure to one of the earliest, premium Verstappen cards featuring an autograph and patches. Until 2020, there was no major F1 product, meaning that these cards could be held in similar esteem to an RPA, particularly for a younger driver like Verstappen, who hasn’t been around long enough for many earlier, one-off cards to exist (like Hamilton’s Futera Grand Prix card, though there is the 2016 Tops Trumps Verstappen). Rally bought this card at Goldin in February for $30,000. Since then, the mid-to-high end Verstappen market, as measured by the performance of numbered or parallel Topps Chrome cards, is flat-to-slightly up. His 70th Anniversary Orange card in PSA 10 condition is up to $5,750 from $4,500. His Purple Refractor (/399) is up from $3,500 in early March to $4,600 earlier this week. His Aqua Sapphire is up from $7,850 in January to $12,000 on the last day of April. Finally, a PSA 10 Glove Patch Auto /10 sold at PWCC in March for $36,000 - while the grade is higher and perhaps gives some pause, it can also suggest the $30,000 February sale was no major outlier, and there is no PSA 10 example of the Rally card at present. Additionally, the premium from the Goldin sale to the Rally valuation is relatively small at $2,000. Notably, Lewis Hamilton's Triple Relic Auto, graded PSA 10, is up nearly 143% since it debuted on Rally, reaching a $90,000 valuation and illustrating the fractional appetite for F1.

Bear Case

• Rare, but rare enough? This card comes from a print run of ten and is the highest graded in that run. However, when you examine the checklist for the 2020 Topps Dynasty Set, you’ll note that there are actually a total of 149 Verstappen patch autos in the set. There are 64 Triple Relic Verstappen cards alone, including four 1/1s and twenty /5s. By no means is that sum totally outlandish, particularly considered against the various parallels offered of a National Treasures /99 RPA, but it does reduce the meaning of the “/10” distinction.  The Dynasty set will also compete with the various serial numbered cards in the 2020 Topps Chrome set, adding further supply that may dampen the importance of this particular card. The status of the card as the highest graded is also at risk. Just two cards of the ten card run have been graded, both by BGS. Other cards from the set (Dual Relic, Autographed Patch) have achieved a gemrate of approximately 45% at PSA. Fewer cards from the set have been graded by BGS (about half), but to date, none have graded higher than BGS 9.5, but 12 of 45 cards have reached that level.

• Career risk. At the age of just 24, Verstappen looks to be as promising a bet as any to headline the next decade of F1 racing. However, in a sport as rife with risk as F1, the expectation of great future success presents just that: risk. There is no assurance that Verstappen can reach the heights of the likes of Sebastian Vettel (four World Championships), let alone Lewis Hamilton (seven World Championships). Vettel saw one of his 1/1 cards from the 2020 Topps Dynasty set sell for $33,600 in March - that card was not graded though, but Topps encased. Still, it’s illustrative of the heights at which Verstappen is already valued, as is the April sale of a PSA 9 Triple Relic /5 Vettel card for just $4,438.

• Lower public profile. Notably, Max Verstappen opted out of participating in the latest season of Drive to Survive, a key vehicle in the frantic rise of the sport’s popularity, particularly in the US. He is the only driver to fully boycott the series. While his on track performance speaks for itself, collectability often benefits from an engaging off-track/field/court persona. To the extent he doesn’t dominate on track, a lacking connection with new and maturing fans of the sport may leave the growth of his fanbase vulnerable to more affable, visible competitors whose cards are also currently lower valued. Note: Verstappen, despite being the reigning world champion, boasts an Instagram following (8.4mm) not dramatically larger than that of Charles Leclerc (7.1mm) or former teammate Daniel Ricciardo (6.8mm). Lewis Hamilton’s following is nearly 28 million people.

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