WHAT BRINGS VALUE TO NBA TOP SHOT MOMENTS?

We’ve all got that friend who insists that they have no intention of making money from NBA Top Shot. “I swear, I’m a collector,” they protest. But let’s be real. Whether you have a genuine interest in buying moments purely as a collectible or not, when you spend your hard-earned money on one you ideally want to see it rise in value. In these early days of the NBA Top Shot platform, what exactly causes these price fluctuations is still well and truly up for debate, and while some of the theories surrounding the valuation of moments have a lot of merit to them, others are a little less convincing. We want to develop a framework which focuses more on the former of those. This framework is fluid and will develop alongside Top Shot itself, and it’s objective is simple: to make it easier to evaluate your moments and how their value may change over time. It’s centered around three factors: the basic metrics, the intangibles, and overall market factors.

The Basic Metrics

These are the first things that the vast majority of NBA Top Shot users will look at when trying to decide if a moment is over or under-valued. The basic metrics are readily accessible on the Top Shot site, and while they’re objective in the sense that they are tangible and fixed, just how each of them influences the market is still subject to debate.

The most significant of these basic metrics is rarity. It’s pretty clear at this point that moment value is heavily influenced by how rare it is, with moments which are for all intents and purposes very similar yet selling for vastly different prices purely based on this alone. The concept of scarcity is certainly not unique to Top Shot – the Mona Lisa wouldn’t be worth close to $1 billion if Leonardo da Vinci had spent his life painting 35,000 versions of it and distributing them around the world. 

The first Mona Lisa that da Vinci painted, however, would likely have more value. It’s the same with Top Shot moments – turns out Top Shot and the Mona Lisa have more in common than you might have originally thought. You’d be forgiven for thinking that a moment with a serial number of 1 attached to it is technically no different to the 10,525th version of that moment, particularly given they are purely recreations of the same highlight – it’s not as though the #1 edition is truly the original. Nonetheless, it impacts price enormously. #1 and whichever # matches the player’s jersey (for example, #23 for LeBron) tend to be the most coveted, but any serial number with three figures or less seems to have added value.

Then there’s the series. These relate to when the moments were released, and so far, we’ve only got Series 1 and Series 2. Of course, that will obviously change in the years to come – something many Top Shot users seem to forget. Clearly, Series 1 is currently far more sought-after, but it’s worth remembering that Top Shot is still very much in its infancy. No one truly knows how it will play out, but in a few years time when there are Series 10 moments floating around, presumably Series 2 will look pretty good. 

There are a number of more secondary factors which could easily be explored in detail, too. Players’ first moments tend to be more highly valued, as do moments from rookie seasons - particularly now that Top Shot has added badges for them. And what about the play type? Is a dunk better than a block? Is a block better than an assist? Player performance in the game from which the moment came could also become relevant, as could team performance from that year (particularly if it’s from a Championship year). The possibilities are endless.

The Intangibles

Now to the intangibles. Already there is an enormous amount of discussion about how the basic, objective metrics impact value, so you can only imagine how contentious these may get given they are more subjective in nature. These intangibles tend to be more related to the career of the player in a moment, rather than the moment itself.

The most obvious of these subjective factors is the star power of the player. The best, most popular players, those whose jerseys fly off the shelves, unsurprisingly tend to have more value attached to their moments. LeBron James moments are worth more than those of Darius Bazley. Even for players of similar ability, however, there are inexplicable outliers. Kawhi Leonard is one star who tends to be undervalued; conversely, Boban Marjanovic’s moments attract a higher price than his NBA output would suggest. Does this mean we can assume moments of all players who seem nice and are really tall are worth more, or is it just Boban?

Of course, this factor is in a constant state of flux. There are many things a player can do to increase or decrease the hype surrounding them outside of being friendly like Boban, and these appear to have some impact on price. For example, if a player is subject to trade rumours which suggest they might move from a struggling, small-market team like Detroit to a powerhouse like the Lakers, it’s possible that may influence the price of their moments, and if the trade actually goes through that becomes even more likely. 

And what if they have a run of great form? It’s hard to imagine one good game would have too much impact on price, but an extended streak of high-level play might be another story. Obviously Top Shot wasn’t around at the time, but think about Linsanity. Presumably Jeremy Lin’s moments would have been wallowing around the shallow end of the price pool prior to his brief ascension to stardom, but by the end of it they may well have been through the roof. 

There are infinite (okay maybe not infinite, but a lot) more intangible factors that we could look at. If the player was an All-Star in the year of the moment or is a potential Hall of Famer, these can potentially influence price. So too can the quality of the moment - a posterizing dunk on LeBron is more attractive than an uncontested layup with some All-Star Game level defense being played. Each of these theories merits an extended discussion in itself, but that will have to wait for another day. 

Market Factors

This is where lovers of economics get to ply their trade and say things like macroeconomic trends and inefficient market. If you want to grow your investment in Top Shot, learn these words – you don’t have to have a deep understanding of what they mean, though it can certainly help if you do.

Because as fun as the above NBA-related factors are, if you don’t have an understanding of the overall Top Shot market and other relevant factors it’s going to be a lot harder to be successful. In fact, the year 2020, Top Shot’s inaugural year, is a perfect example. COVID-19 impacted virtually all of our wallets in one way or another – people may be less likely to spend because they’re having financial difficulties, but at the same time they could be more likely to spend because they’re bored at home and have nothing better to do than watch Netflix and buy highlights of NBA players on the internet.

And what about the Top Shot market more specifically? Particularly in these early days, there is a lot of volatility in the market, with prices fluctuating daily as people try to figure out what on earth they are doing on this new platform. This can easily lead to an inefficient market, which simply means that the price of an asset is not truly reflective of its worth. Some would argue that any price over $0.00 for a replication of a highlight is not reflective of its worth – but we don’t want to hear from those people. 

When a market has been around for a long time, prices stabilize and these inefficiencies are less likely to occur. Avocados are about $2 and have been for a while, so if they suddenly went to $20 no one would buy them, and if they suddenly cost $0.10 many would buy lots more of them. We’re not quite there yet with Top Shot – if the price of a Rodney Hood moment suddenly skyrockets, a lot of people will assume there’s a reason for it and buy, buy, buy! They’ll most likely go on to regret it as the community realizes, hang on, Rodney Hood isn’t that good, and the price drops again. 

This volatility is also impacted by pack drops. When they’re announced, everyone wants to get in on the fun, and fair enough too. The contents are almost always worth more than what you pay for the pack, and when you open it you feel like a kid on Christmas morning. This means that often people sell moments to liquidate funds to pay for the pack drop, while immediately after the release there are typically significant fluctuations in the prices of the pack moments as the masses try to figure out what each is worth. 

Another market factor which is most likely having a significant impact on pricing relates to “group-think theory”. From a Top Shot perspective, basically this means that moments will be valued relative to others around them, regardless of whether it’s justified. If everyone else has decided to sell a given moment for around $50, why shouldn’t you? Given that most people have little else to go on at this early stage of the Top Shot experience, this is probably quite a relevant theory at the moment.

It’s clear that there are many different variables which can impact the value of a moment, and we believe each of these belongs within one of three overarching factors: the basic metrics, the intangibles, and overall market factors. The framework that these factors create will be a constantly developing one and we fully intend to explore each in greater detail. There’ll be articles, graphs, charts, videos and all sorts of other fun stuff (fun for us, at least), and we look forward to hearing the input of fellow Top Shotters as we put it all together.