Background:
On 7/27/21, we dropped a graded copy of Mike Tyson’s Punch-Out!! (Wata 9.4, A+ Sealed, No Rev-A, Round SOQ) on Otis for $136,800 ($10.00/ share).
Last week we received a buyout offer for the game for $350,000 ($25.58/ share). Shareholders should have received an email regarding this offer and have been asked to provide feedback by Thursday, August 19th at 4pm ET.
To discuss this offer with other Otis users, join the conversation on Discord.
Our Analysis:
By nearly any measurement, this offer represents an outsized return for an investment that is only a few weeks old. That said, the collectible video game market has been anything but normal in recent weeks. Little over a month ago a highly graded copy of The Legend of Zelda sold at auction for a then-record sum of $870,000. Later that weekend, a copy of Mario 64 shattered that record by selling for $1.56 million at an auction that saw over a dozen games fetch over $100k. Most recently, a highly graded copy of Super Mario Bros. sold privately for $2 million. Will this record be broken soon? It’s hard to say.
Given the speed at which the market is evolving as well as the rarity of our copy of Mike Tyson’s Punch-Out!! (both in terms of grade and how early of a copy it is), there are no close comp sales to look at to understand the true fair market value of our copy. Probably the closest comparable sale was for a different variation of the game sold in April of 2021 for $102,000 via Heritage Auctions.
Still, when looking at this sale, one must factor in:
-The fact that the market for collectible video games has appreciated substantially since April.
-This sale, while for a higher graded game, was for a much later edition, as evidenced by its oval “Seal of Quality” (SOQ) and the presence of the text “Rev-A” on the box. Our copy of the game features a round SOQ and no “Rev-A” making it among the earliest possible variants (for more on this, see our article on vintage NES game variants).
Given the challenges with directly using any comparable sales, the best estimate we have is from our own expert advisor who has extensive experience in the video game market and estimates the current value of our copy of Punch-Out!! at between $250k-$300k. The important word to consider here is current and it is certainly plausible that the market either continues its upward trajectory from here (in which case an offer of $350k undervalues our copy) or corrects downward.
In the end, predicting market movements is difficult, if not impossible, and evaluating this offer is largely contingent on how one views future market movement in the collectible video game space. Still, given where the market stands today, the buyout offer for $350k is a competitive one.
IMPORTANT UPDATE (8/17/21, 10:20am ET):
We received an alternative analysis courtesy of Alternative Assets that values the game significantly higher at $600k - $960k. Given how much higher of an estimate this is, we wanted to share the analysis with you directly.
RESULT (8/19/21, 4:30pm ET):
The offer was rejected. The results of investor feedback were 92.8% reject and 7.2% reject, weighted by shares.
