As soon as things started picking up at the beginning of 2020, there was immediate speculation on what could be causing the meteoric rise in card values as the pandemic kicked into high gear. That same narrative was immediately accompanied by talk of a bubble, and of course, when it would burst. Just like no one could have ever predicted that a worldwide pandemic would contribute to one of the largest collectible booms in history, no one could have ever predicted it would last as long as it has.

According to CardLadder’s indexing, the hobby seems to be on a downward trend over the last few months, with growth heading in the direction of -8% for the quarter. Despite ups and down, the larger graph still shows pretty flat, which depending on your thought process could be both good or bad. For most of 2021, the incline was a steep upward trajectory that allowed many collectors and investors to throw chips anywhere on the table and come up with a win. Now that things have been much more flat, some of those same people are starting to wonder if the honeymoon is really over.

There are some major contributing factors overall, and ill do my best to give my take on a few of them, especially as social media seems to run with their own agendas and narratives. For the most part there is a split between people holding out for the start of the NFL season, and those that believe this is the sign of the end times. Im somewhere in the middle, and hope I can outline some of the ways I see the hobby trending from a disinterested third party point of view.

The Junk Slab Era

Earlier this week, PSA tweeted out that they were holding 3.6 million cards in backlog, waiting to be graded. This is after A) suspending submissions B) raising prices and C) making better grades seemingly more difficult to achieve. Because grading is a conflict of interest laden business model, making business decisions on the flow of their submissions speaks to a larger issue with the hobby as a whole.

Right now, the hobby ebbs and flows based on the way graded cards are valued across the different corners of the collecting universe. The problem is, there are so many graded cards out there, that the way the public perceives them has changed dramatically over the last 2 years. The hyper mint marketing ploy that each of the 19373 grading companies have employed has started to backfire, especially as more “Gem Mint” cards drop in value overall.

For the last 2 years, collectors have employed a “GRADE ALL THE THINGS!” approach to their collection, sending in everything from worthless base cards to high dollar investment pieces, all with the hopes of gaining more value and equity in their PCs. As a result, the junk slab era has come to be a major factor, with so many investors seeing dips in readily available cards drawing less value on the secondary market.

With the backlog of grading showcasing that there are an insane amount of cards still to enter the market, this flood has massive implications on the supply vs demand economics of the hobby. For so long, the promise of increased value in graded cards had driven keen collectors to take advantage of the situation, but that secret has been transformed into a wave of (no longer scarce) cards being put on the block and selling for less and less. The scariest thing, is that the tidal wave hasnt even reached the mainland, because as we see, a ton more cards are still waiting to be processed.

The End of the Pandemic Era

For most in the world, life is relatively back to normal, with only a few reminders that Covid is still raging as a major factor in the lives of many. Now that people are out and about, taking vacations, eating at restaurants, and living their existence to the fullest again, disposable income is starting to be applied to other areas of budgets.

I stand by the fact that the lack of opportunity to spend money is what kicked off the collectible boom, and now that those options are back, many more people have to balance their spending. Similarly, because of more people being out from isolation, gas prices spiked, and world conflicts made those situations 10 times worse. This has also led to massive inflation, alongside a lack of stimulus payments that gave many collectors the money to buy cards they wouldnt normally buy.

Right now, this is a perfect storm of contributing environmental factors, and I havent even begun to go through the crypto crash that has impacted a ton of source funds that some investors were using to invest in cards.

Increased Supply without Increased Demand

The value of cards as an asset is something that can be traced almost directly to two things – supply and demand. Basic economics at play. For the beginning of this boom, the demand for cards was insatiable, with many collectors seeing their access to wax and singles stripped away as more and more people entered the market.

As expected, the manufacturers immediately tried to match the demand with more supply, but due to pandemic worker shortages and material issues, most could not keep up in any real way. Now that we are going into the summer of 2022, some of that has normalized, with supply finally catching up as a result of increased production runs combined with all the factors listed above. Demand has cooled on certain things, and collector revolts against high prices in the lower classes of spending have led to major shifts in both the primary and secondary markets.

Certain things have been holding stable, but the areas seeing the most problems are the areas with the most supply. High run flagship sets with large retail configurations have seen cooling, as well as some of the top high end products. These offerings, whose prices have risen above the prospects of the tent pole hits have seen breakers move away from trying to fill their lists. Flawless Basketball had risen to over 20k per box before the hunt for the triple logoman card ended. F1 Dynasty released yesterday at $18k per case, which only contains 5 cards. The appetite for super premium releases seems to have shrunk, but its all about which of those products really feels the pain.

So far, the singles market at the top levels seem to be holding, with big sales still going down regularly at many of the big auction houses. If you go back to my posts on this topic from earlier, this is some of the ways I expected the end of the boom to go down. We will have to see if this quarterly downturn is temporary or if this slow decline leads to something more drastic.

Delays in Production

Even with more supply hitting the market, we are still seeing major production delays rippling through the calendar across each of the manufacturers. Its now into May, and we still havent seen 2021 Prizm Football, a product that usually hits before the beginning of the NFL season. With every manufacturer trying to cash in on the demand before it cools further, this is a direct result.

Most of the delays come from material shortages these days, but at the beginning of this, it was a combination of that plus lack of resources to put the products together once they were printed. At first this led to more demand for a decreased supply, but that situation has been turned on its head now that the hungry base of collectors is starting to move onto a ‘wait and see’ type of investment approach for many of the bottom 90% of the market.

Fear of Consolidation

As if things couldnt get more complicated, there is also a huge cloud hanging over the hobby coming sooner rather than later. Fanatics has acquired all the major licenses. Fanatics has also aquired Topps. This means that hobby consolidation is no longer a pipe dream, its a plan in its execution stage.

Even with the gigantic influence that Topps has had on cards for close to 100 years, collectors are starting to fear what could happen when Panini is removed from the equation. To date, Topps has found success in a lot of areas, but the investor crowd has entered this game when Panini owned the top two sports in the land.

Almost immediately after the boom began, many of the biggest sales went down in football and basketball, and focused on legacy sets that drive the Panini brand wagon. Although there are many theories that suggest those sets wont die due to further consolidation, its clear that there is a lot of trepidation around the future of investor friendly sets.

Honestly, this whole thing doesnt look like its set up for long term success. There are too many headwinds for the hobby to remain at an all time high. Now that doesnt mean its going to snap back to pre-boom prices, as that bell has already been rung. I also dont believe we are on the verge of a massive selloff, but its clear that the environment created by the factors described here could contribute to a drop that people might not be ready for. As always, that exit strategy needs to be in place, but I will close here by saying this isnt the time to pull every fire alarm. However, there is some smoke that will send people to the exits. Hopefully, things bounce back and this post looks more like chicken little and less like Nostradamus.