On April 6, 2021 Topps Co Inc. announced its intentions to become a publicly traded company via a reverse merger with a special purpose acquisition company led by Mudrick Capital. The deal places a $1.3 billion valuation on Topps, an iconic sports card and confectionary brand. Shares of Mudrick Capital II (NASDAQ: MUDS) closed up 4.43% today at $13.67 per share.
Topps is perhaps best known for their sports trading cards and portfolio of candy products which includes Ring Pop, Bazooka, and Push Pop. As part of the SPAC merger, Topps will receive $571 million.
According to the investor presentation, Topps will be looking to expand their "digital ecosystem," which includes building upon their digital tech presence and online community. Specifically, they are seeking to expand into blockchain to create "incremental revenue opportunities."
Thanks to the Worldwide Asset eXchange (WAX) and blockchain technology, Topps has succesfully brought Garbage Pail Kids to the digital collectible world. Cards can be bought, gifted, and traded as non-fungible tokens (NFTs). The authenticity of each NFT is verified with blockchain technology and ensures that they cannot be duplicated. Using a WAX Cloud Wallet, collectors can easily store their cards purchased through the marketplace, trade with other collectors via blockchain, and show off their collection on connected social media platforms.
Topps is projecting $41 million in revenue from digital sales, which still pales in comparison to their estimated $398 million in revenue from physical sales. Looking ahead to 2022, digital sales are expected to grow 24% from 2021 while physical sales are expected to increase by 38% YoY.
Is the future of trading cards NFTs? I'm skeptical myself, as I think I would prefer to own the physical collectible. I can't imagine why anyone would want to pay for a card that can't be physically held and displayed.
But clearly the demand is there, as 20,000 digital packs of Garbage Pail Kids cards sold out in just over an hour last July. I suppose one way to look at it is this: when I was a child, everyone had a photo album in the house full of prints. Now, everyone has their favorite shots stored on their phones and in the cloud.
Just as photography has gone digital, currencies are going digital, so are collectible cards. So it seems that the 80-year old Topps company is making the right move "living in the now," as they would say in Wayne's World.
Stay tuned for my next post, where I will open a pack of Topps movie trading cards from 1987.
Photo courtesy of Pixabay of pexels.com
I hold no position in Mudrick Capital Acquisition Corp. II and nothing mentioned in this blog post should be considered financial advice.
