Making sense of OpenSea at a $13B valuation
For critics of the present-day cryptoeconomy and NFT market, the round was perhaps more evidence of how overheated things have become. After all, OpenSea last raised at a fraction of its new valuation under a year ago, adding $100 million to its accounts at a $1.5 billion valuation in July.
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That sort of valuation appreciation must indicate prohibitive speculation among the investing classes, right? Well, let’s find out.
OpenSea is a pretty straightforward business to understand. As I wrote over my winter vacation, the company takes a 2.5% cut of transactions on its service. That means we can track its aggregate trading volume and come up with ballpark estimates for its scale.
I want to figure out how the new OpenSea valuation squares up with its revenues. From there, we’ll ask if the company feels underpriced or overpriced. This will be a fun journey of collecting data and executing minor math magic. Let’s do some thinking!
OpenSea’s NFT business
The simplest way to get a handle on the scale of OpenSea is to simply check its trailing 30-day trading volume and apply its 2.5% take rate to the sum. Per crypto data source Dappradar, OpenSea saw $2.91 billion in trading volume in the last 30 days. That works out to an anticipated gross haul from OpenSea of $72.75 million.
That’s a month, mind. If we took that single period and multiplied it to generate a yearly run-rate figure, OpenSea would be on pace to see $34.92 billion in volume, generating gross revenues of $873 million over 12 months.
There are other ways to get our hands on the company’s scale. Data from Dune Analytics collected by @rchen8 has more granular historical data to parse. Per Dune, OpenSea saw trading volume of $3.25 billion in December, $2.37 billion in November, and $2.64 billion in October. Combined, those figures work out to $8.26 billion in volume, a 2.5% cut of which would be worth $206.5 million.
If we extrapolate that final number to a full-year tally, it would shake out to a yearly run rate of $826 million. That’s pretty close to our first number of a yearly run-rate estimate of $873 million for OpenSea’s gross revenues, provided that the company’s flat-percentage costs execute in-market as we anticipate.
Let’s use a yearly run rate of $850 million for the company because it’s in between our two estimates for the company’s recent revenue pace, extrapolated to a full-year tally. At a $13.3 billion valuation, OpenSea is only worth 15.6x its present-day run rate. That’s very not insane for today’s market.