Making sense of OpenSea at a $13B valuation
OpenSea, the well-known NFT marketplace, has raised a $300 million round at a $13.3 billion valuation. Newcomer broke the news yesterday before the company confirmed the transaction.
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.
Can we get precise? Nope. Can we learn enough to better understand why OpenSea managed to command such a huge check and towering valuation? Yes, I think so.
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.