An initial public offering, or IPO, represents the first time a company makes its shares available for public trading. A pre-IPO placement involves the sale of unregistered shares in a company before they’re listed on a stock exchange for the first time.
A pre-IPO placement usually occurs immediately before a company goes public.
Companies typically sell pre-IPO shares to hedge funds, private equity firms and other institutional investors that can purchase them in large quantities. It’s possible, however, to get involved in pre-IPO investing as an individual retail investor.
Investing in IPOs or pre-IPO stock could be profitable, if the company’s public offering lives up to or exceeds market expectations. But it’s also risky, since you never know how a stock will perform in the future.
How Does Pre-IPO Placement Work?
An IPO, or initial public offering, is an opportunity for private companies to introduce their stock to the market for the first time. A typical IPO requires a lengthy process, as there are numerous regulatory guidelines that companies must meet.
Once those hurdles are cleared, however, the company will have a date on which it goes public. Investors can then purchase shares of the company through the stock exchange where it lists.
Pre-IPO investing works a little differently. The end goal is still to have the company go public. But before that, the company sells blocks of shares privately, based on its IPO valuation. A successful pre-IPO gives the company attention, as well as capital from investors ahead of the actual IPO date.
For the most part, pre-IPO shares are restricted to high-net-worth investors, or accredited investors, i.e. those who can afford to invest large amounts of capital, and can afford to take on a certain amount of risk. A pre-IPO placement of shares could be made without a prospectus or even a guarantee that the IPO will occur.
Individual investors typically don’t have the funds required, or the stomach for that level of risk.
In return for that measure of uncertainty Pre-IPO investors get in on the ground floor and purchase shares before they’re available to the market at large. There may also be an added incentive. Because they’re buying such large blocks of shares, pre-IPO investors may get access to them for less than the projected IPO price. 💡 Quick Tip: IPO stocks can get a lot of media hype. But savvy investors know that where there’s buzz there can also be higher-than-warranted valuations. IPO shares might spike or plunge (or both), so investing in IPOs may not be suitable for investors with short time horizons.
An Example of Pre-IPO Placement
Pre-IPO placements have gained popularity over the last decade, with more companies opting to offer them ahead of going public. Some of the companies that have offered pre-IPO stock include Uber and Alibaba, both of which have ties to e-commerce.
Alibaba’s pre-IPO offering was notable due to the fact that a single investor and portfolio manager purchased a large block of shares. The investor, Ozi Amanat, purchased $35 million worth of pre-IPO stock at a price that was below $60 per share.
He then distributed those shares among a select group of families. By the end of the first public trading day, Alibaba’s shares had risen to $90 each. Alibaba’s IPO delivered a 48% return to those pre-IPO shareholders due to higher-than-expected demand for the company’s stock.
In Uber’s case, PayPal agreed to purchase $500 million worth of the company’s common stock ahead of its IPO. PayPal then lost a large portion of its investment when the Uber stock price fell by about 30% following its IPO.
Pros and Cons of Pre-IPO Placement
There are benefits to pre-IPOs placements, but there are also some important drawbacks that investors should understand.
Pros of Pre-IPO Placement
From the perspective of the company, pre-IPO offerings can be advantageous if they help the company to raise much-needed capital ahead of the IPO. Offering private placements of shares before going public can help attract interest to the IPO itself, which could help make it more successful.
For investors, the benefits include:
• Access to shares of a company before the public.
• The potential ability to purchase shares of pre-IPO stock at a discount. So if a company’s IPO price is expected to be $30 a share, pre-IPO investors may be able to purchase it for $25 instead. This already gives them an edge over investors who may be purchasing shares the day the IPO launches.
• Purchasing shares at a discount can potentially translate to higher returns overall if the IPO meets or exceeds initial expectations. The higher the company’s stock price rises following the IPO, the more profits you could pocket by selling those shares later.
Recommended: How to Find Upcoming IPO Stocks Before Listing Day
Cons of Pre-IPO Placement
While pre-IPO investing could be lucrative, there are some potential backs to consider. Specifically, there are certain risks involved that could make it a less attractive option for investors.
• The company’s IPO may not meet the expectations that have been set for it. That doesn’t mean a company won’t be successful later. Facebook, for example, is noteworthy for having an IPO described as a “belly flop”. A disappointing showing on the day a company goes public for the first time could shake investor confidence in the stock and bode ill for its future performance. That in turn could affect the returns realized from an investment in pre-IPO stock.
• The company may never follow through on its IPO and fails to go public. In that case, investors may be left wondering what to do with the shares they hold through a pre-IPO private placement. WeWork is an example of this in action. In 2019, the workspace-sharing company announced that it had scrapped its plans for an IPO, thanks to limited interest from investors and concerns over the sustainability of its business model. In 2021, the company did go public — but not through an Initial Public Offering. Instead, WeWork went public through a merger with a special acquisition company or SPAC.
• Pre-IPOs are less regulated than regular IPOs.
💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.
Summary of Pros and Cons of Pre-IPO Placement
Here’s a quick look at the benefits and drawbacks of pre-IPO placements:
Pre-IPO Private Placement Pros and Cons
Pros
Cons
• Investors have an opportunity to get into an investment ahead of the crowd
• Pre-IPO investors may be able to purchase shares at a price that’s below the IPO price
• Purchasing pre-IPO stock could yield higher returns if the IPO is successful
• Pre-IPO placements can be risky, as they’re less regulated than regular IPOs
• There are no guarantees that an IPO will deliver the type of returns investors expect
• Does not guarantee you’ll get the loan
How to Buy Pre-IPO Stock
Typically, only accredited investors can purchase pre-IPO placements. As of 2021, the Securities and Exchange Commission defines an accredited investor as anyone who:
• Earned income over $200,000 (or $300,000 if married) in each of the prior two years and reasonably expects to earn that same amount in the current year, OR
• Has a net worth over $1 million, either by themselves or with a spouse, excluding the value of their primary residence, OR
• Holds a Series 7, 65 or 82 license in good standing
If you meet these conditions for accredited investor status, then you may be able to purchase shares of pre-IPO stock through your brokerage account. Your brokerage will have to offer this service and not all of them do.
Other options for buying pre-IPO stock include purchasing it from the company directly. To do that, you may need to have a larger amount of capital at the ready. So if you’re not already an angel investor or venture capitalist, this option might be off the table.
You could also pursue pre-IPO placements indirectly by investing in companies that routinely purchase pre-IPO shares. For example, you might invest in a mutual fund or exchange-traded fund that specializes in private equity or late-stage companies preparing to go public. You won’t get the direct benefits of owning pre-IPO stock but you can still get exposure to them in your portfolio this way.
The Takeaway
For some high-net-worth or institutional investors, buying pre-IPO shares — a private sale of shares before a company’s initial public offering — might be possible. But it’s highly risky. For the most part, individual investors won’t have access to these kinds of private deals. But eligible investors may be able to trade ordinary IPO shares through their brokerage.
Whether you’re curious about exploring IPOs, or interested in traditional stocks and exchange-traded funds (ETFs), you can get started by opening an account on the SoFi Invest® brokerage platform. On SoFi Invest, eligible SoFi members have the opportunity to trade IPO shares, and there are no account minimums for those with an Active Investing account. As with any investment, it’s wise to consider your overall portfolio goals in order to assess whether IPO investing is right for you, given the risks of volatility and loss.
Invest with as little as $5 with a SoFi Active Investing account.
Photo credit: iStock/filadendron
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
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Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.
New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
It’s common for home buyers to purchase a property in a certain school district.
This ensures their children can attend a specific school if they’ve got their eye on one in particular.
Heck, even those without kids might favor a certain home because it resides in a highly-sought after district.
Now Zillow has made it easier for prospective home buyers to find properties in attendance zones or school districts simply by using the search bar.
When using the company’s mobile app, you’ve got the option to search by school, just as you would city or neighborhood.
Search by School on Zillow to Find a Home in Your Desired District
The latest update to the Zillow app allows home shoppers to search by school attendance zone or school district.
Simply open the app and navigate to the search bar. Instead of typing in a certain city or neighborhood, type the name of a school you like.
From there, Zillow will automatically display the attendance zone boundaries on the associated map in the app.
You’ll be able to see properties that are available for sale (or rent) within the attendance zone selected.
And if you search for open enrollment, or for a charter or private school without an assigned boundary, Zillow will display homes within a 5-mile radius surrounding the school.
The new search-by-school feature also allows home shoppers to receive instant or daily alerts when new for-sale or for-rent homes within their preferred school district or attendance zone come online.
That way you’ll be the first to know if a property meeting your school district needs pops up.
Since homes in desirable school districts are often quite popular, this can provide a competitive edge over other prospective buyers.
Those who are logged-in users will also see auto-complete suggestions for relevant schools and school districts based on their search history.
As always with any sort of property details, be sure to double-check that the home is indeed in the school district.
While it’s helpful to have this information generated automatically, it’s always smart to verify that the details are accurate.
This functionality is currently available on Zillow’s iOS mobile app and will launch on Android by the end of 2024 (it will be on the web sometime next year).
School Districts Are Very Important to Home Buyers
While there are a number of reasons why home buyers choose their properties, school district is a biggie, especially for those in their 30s.
And the prime first-time home buyer age is around 34, so most home buyers are going to be very focused on the associated school district.
As noted, even those without kids (or no interest in having kids) should be concerned with school districts as they can impact valuations pretty significantly.
You’ll often find that property values (and list prices) are notably higher in highly-sought after school districts.
This means a home seller can unload their property for a premium, or rent it out for more to a family who wants to reside in the district.
But it is also typically means you’ll pay more for it, and/or face more competition when attempting to buy the property.
Per Zillow’s Consumer Housing Trends Report, 75% of home buyers in their 30s emphasize the importance of school district selection.
Additionally, 67% of buyers in their 40s and 61% of first-time buyers consider school district a highly important factor in their home search.
This trend also seems to be growing, with the percentage of buyers who considered school districts highly important rising to 52% in 2023 after holding steady at 43% from 2018 to 2021.
Homes Tend to Appreciate More in Good School Districts
Back in 2016, I wrote that you should buy a home in a good school district even if you don’t have kids because they tend to appreciate more than those in not-good districts.
A study by ATTOM Data Solutions analyzed average test scores from about 19,000 elementary schools nationwide that covered nearly 46 million single-family homes and condos.
They discovered that in zip codes with at least one good school, the average estimated home value was 77% higher than in zip codes without any good schools.
Despite being more expensive, these good school district properties increased an average of $74,716 since the time of purchase, compared to just $23,311 for the not-good districts.
In other words, the purchase price might be higher to start, because it’s located in a good school district, but over time it should outperform properties located in the not-good school districts.
This might explain why there are even single-family home investors who are actively targeting properties in “elite school districts” these days.
While I don’t necessarily endorse that approach, since it makes getting into good school districts even more competitive for young families, it makes business sense.
All that being said, school districts aren’t everything. It can also pay off to buy a home near a Starbucks, a Target, or a Whole Foods or Trader Joe’s.
But ultimately, you should love the home you make an offer on, and want it for a variety of reasons that go beyond it’s potential monetary value.
Read more: When should you start looking for a house?
Since ICE announced plans to acquire Black Knight in May 2022, the firm went through a bumpy 16-month-period facing antitrust concerns from the Federal Trade Commission(FTC), lawmakers and trade groups.
FTC sued ICE earlier this year alleging the two top mortgage technology providers would drive up costs, reduce innovation and limit lenders’ choices for mortgage origination tools.
In an effort to save the merger deal, the two companies agreed to sell Black Knight’s Empower loan origination system and product and pricing engine (PPE) unit Optimal Blue to a subsidiary of Canada’s Constellation Software.
Under the agreement between the FTC and the two mortgage tech providers, ICE completed the sale of Black Knight’s Optimal Blue and Empower in September.
ICE affirmed that Optimal Blue is still available to its customers, who are the largest consumers of Optimal Blue Solutions.
In parallel, ICE plans to develop its own PPE to provide additional options to lenders and partners, ultimately lowering the cost for the consumer.
“We plan to maintain and invest in our own product and pricing engine, further strengthening the mortgage ecosystem by providing additional options and greater efficiencies to lenders, servicers and partners. Ultimately, lowering acquisition costs for lenders and enabling those savings to be passed to the consumer,” Jackson said.
With Black Knight part of ICE now, executives expect the integration of data and technology across the mortgage workflow to enable greater automation, in turn reducing friction and lower cost to originate a home mortgage for every party involved.
“By combining data on the consumer’s payment history, and loan balance with our rich analytical solutions, such as our valuations and AllRegs – which is an industry leading product availability and eligibility database – our servicing customers will be able to identify opportunities to proactively offer more efficient loan solutions to help lower costs and meet consumers needs,” Jackson noted.
Other opportunities ICE acknowledged include developing innovative analytics that help lenders connect with potential buyers in historically underserved markets and identify minority bias in the home valuation process.
Financials
In terms of financials, ICE expects net revenue synergies of up to $125 million by 2028 largely through cross-sell opportunities across the platform and ICE’s expanded customer base.
ICE executives said they’ve identified north of $300 million worth of opportunities for the company to go after which includes cross-selling data and document automation platform to the entire Black Knight’s MSP mortgage servicing system.
“There’s a little north of 100 [MSP clients] and we believe that 40 of those are not on Encompass today. That represents roughly 15 to 20% market share of annual loan volume that we think we’re going to have a great opportunity,” Jackson said.
For example, JPMorgan Chase, one of the largest servicing customers of Black Knight, is implementing ICE’s data and document automation platform to both its retail and correspondent channels, replacing its in-house legacy infrastructure, executives noted.
ICE expects Backnight to contribute approximately $85 million to $90 million of net revenues, and roughly 50 million to $55 million of adjusted operating expenses to Q3 results.
Full year 2023 ICE Mortgage Technology (IMT) revenues including the legacy IMT business and pro forma for Black Knight are expected to be between $2.05 billion and $2.07 billion.
“With Black Knight, ICE is well positioned to improve the execution and subsequent settlement and servicing of US home mortgages, the major credit exposure for most US consumers,” said Jeff Sprecher, chair and CEO of ICE.
If you’re planning to refinance or sell your home, perhaps the first thing you need to consider is how much it’s worth. Unfortunately, getting an accurate estimate of your home’s value today takes some homework.
How accurate are online calculators?
You’ve probably encountered calculators on real estate sites that make it look easy to value your home. By entering your address, you get a number or a range of values. Unfortunately, not all of these are accurate.
Try out a few calculators and you’ll end up with an uncomfortably wide range of values. The reason is that the quality and currency of their data varies. Moreover, none can look inside a home and see how well it has been maintained or improved.
Appraisals are the most effective
Whether you are refinancing, selling or buying, the only valuation that counts is the appraisal from a licensed appraiser hired by the lender who is doing your refinancing or financing a prospective buyer.
Even if the buyer and seller agree on a price, an appraisal lower than the agreed on price will force the buyer to come up with more cash or the seller to lower his price to save the deal. During times like these when prices are rising, appraisals often are lower than contract prices.
In fact, studies show that owners overestimate the value of their homes about 11 percent of the time.[1] In February, appraisal issues killed 11 percent all deals that were terminated before closing.[2]
Should you get an appraisal before listing?
Getting the home’s value right is the first step in pricing a home before it is listed. Real estate agents can help you decide how to price your home for the market, but if you want to what it’s actually worth before you list it, you should hire an appraiser (generally around $500).
There’s one more reason that a current appraisal makes sense for sellers. Appraisal data is collected and aggregated by data services who sell it to websites with home valuation calculators. Getting a fresh appraisal into the mix increases the odds that the value that buyers see when they surf your listing will be more accurate and current.
Buyers can also hire their appraiser if they do not trust their lender’s appraisal, but fighting an appraisal is rarely a successful strategy. It is better to do some homework before making an offer, especially if you are relying on the values generated by website calculators.
How to find comps
When appraisers determine valuations, they select three or more houses of roughly the same number or beds and baths, same square footage, age and lot size that have sold within the past six months—or ideally, the past 90 days. In a busy time of year, like the spring or early summer, market trends can change prices significantly. These comparable homes, or “comps,” should also be located as close as possible to the house being appraised.
Finding this data can be difficult for the layperson. Real estate agents have access to it, though. They can locate comps using the same criteria as an appraiser and create an estimate of a house’s value, called a comparative market analysis or CMA. A good CMA provides a useful analysis of current market conditions as well as a range of the house under consideration. Best, of all, it is usually free.
What does the future hold?
New methods of valuing houses using “Big Data” techniques that require extensive data from millions of properties are now being developed for use by investors, appraisers and lenders. Someday soon, they also will be available to real estate consumers.
Collecting and trading Pokémon cards has been a popular hobby since the 1990s for both children and adults. In fact, as a kid, I was obsessed with Pokémon cards. I enjoyed opening new packs, collecting cards, and trading with my friends. And, I know I’m not alone. So many people have enjoyed Pokémon cards over…
Collecting and trading Pokémon cards has been a popular hobby since the 1990s for both children and adults.
In fact, as a kid, I was obsessed with Pokémon cards. I enjoyed opening new packs, collecting cards, and trading with my friends. And, I know I’m not alone. So many people have enjoyed Pokémon cards over the years as well.
As the value of certain cards continues to rise, finding the best places to sell your collection of Pokémon cards is more important than ever.
Whether you’re looking to make some extra cash, simply downsize your Pokémon card collection, or if you are decluttering everything you own and find a long lost box of childhood mementos, knowing where and how to sell your Pokémon cards can be important to make the most money.
In this article, I’ll discuss some of the best places to sell Pokémon cards online and locally and provide tips on how to price and present your cards in the best way.
Quick Summary
Identify and evaluate the value of your Pokémon cards before selling. Some cards are worth way more than others. For example, one card may be worth $0.10, and another may be worth over $100,000.
Look at your different selling options to see how you can get the most money.
Learn effective selling tips and strategies for presenting your cards to potential buyers.
How To Sell Pokemon Cards
Selling your Pokémon cards can be an exciting and profitable way to make money, especially if you have rare, holographic, or near-mint-condition cards in your collection.
To help you make the most profit, follow these tips to find the best places to sell your Pokémon cards. Before starting your Pokémon cards selling journey, it’s important to know your cards’ condition, rarity, and type.
Related: How I Made $40,000 In One Year Selling Items
Near-mint cards with no creases, scuffs, or whitening edges tend to have a higher value. Also, rare and holographic cards, like the famous Charizard, are highly wanted by fans, collectors, and trading card game enthusiasts, making them valuable in the Pokémon card market.
To figure out how rare your Pokémon card is, look for the symbols in the bottom right corner of your card and if you have a lot of cards, then you should become familiar with the Pokémon card rarity indicators, as well as the different sets and booster packs in which your cards were released.
For more accurate valuations, you may even look for professional grading services, such as Professional Sports Authenticator (PSA). They evaluate and grade cards based on their condition, ensuring buyers of their authenticity and quality.
If you’re selling Pokémon cards online, make sure to take clear, high-quality pictures that showcase your cards’ condition, as this will give potential buyers a better idea of what they’re purchasing.
By following these tips and tricks, you’ll be prepared to sell your Pokémon cards and get the most amount of money.
Best Places To Sell Pokemon Cards Online
There are many ways to sell Pokémon cards online. Here are some Pokémon selling sites to start with:
1. eBay
eBay is one of the most popular marketplaces for selling Pokémon cards due to its large reach of customers around the world.
I did a quick search on eBay and there are currently over 160,000 Pokémon cards for sale – so they definitely have a huge market!
You can choose to sell your cards through auctions or fixed price listings. When selling on eBay, be mindful of the seller fees and PayPal fees that will be deducted from your earnings. Shipping will also be another cost.
eBay is especially good for selling valuable cards, such as holographic cards or rare Charizard cards. To reach a wider audience and increase the chances of a successful sale, make sure you write detailed descriptions and add high-quality photos of your cards so that people are more likely to click on your listing.
2. Troll and Toad
Troll and Toad is an online store that specializes in collectible card games, such as selling Pokémon cards and they have been around for over 25 years.
They offer a buy list where you can sell your cards for cash or store credit. To sell on Troll and Toad, simply use their search bar to find the cards you want to sell, add them to your cart, checkout, and then ship your cards to them.
This is a great feature of Troll and Toad – the fact that you can see the exact cards they will accept and the exact amount that they will pay you for each Pokémon card. As you will learn below, many of the Pokémon card selling websites have this same feature, which is so helpful!
After you complete the list of cards that you plan on selling to them, you will print out an invoice that they give you, and then choose a payment method. Then, you will ship your box of Pokémon cards to them. Once they receive the package, they will verify the cards that you have sent to make sure they are in the correct condition as you stated. After that, they will pay you.
Troll and Toad also accepts Pokémon cards in bulk.
Keep in mind that they may be selective about the cards they accept, so it’s important to research and determine the value of your cards beforehand.
3. Mercari
Mercari is a site where you can quickly set up an account and start selling your used items, such as Pokémon cards. This site is not dedicated to just Pokémon cards, but they do have many listed and it is an easy option for Pokémon collectors.
There are well over 1,000 Pokémon cards listed on Mercari.
It’s important to create persuasive listings with photos and a relevant, detailed description, and include relevant keywords related to Pokémon cards. (Remember, they don’t just sell Pokémon cards, they also sell clothes and other items, so keywords are important!). Also, Mercari takes a minimum 10% fee from each sale you make on their platform.
4. TCGplayer
TCGplayer is a popular site with card game collectors in the U.S. and Europe.
People love selling on this site because they say it’s easy to use and they have great customer service.
To sell Pokémon cards on TCGplayer, simply list your cards on the TCGplayer marketplace, set your prices, and wait for potential buyers to purchase them. The marketplace handles the transactions, making the selling process easy.
Note: You will have to pay a commission fee of around 12–13% for each sale you make on TCGplayer, and you might also have shipping costs.
Here’s a quick guide on how to sell Pokémon cards on TCGplayer:
Create a seller account – You will need an account to get started selling Pokémon cards.
Set up your inventory – Once your seller account is created, you can start listing your Pokémon cards for sale. Enter details like the card’s name, set, condition, and quantity available.
Pricing your cards – Decide on the prices for your Pokémon cards. You can either manually set the prices or use TCGplayer’s automated pricing tool to match the market rates. TCGplayer has a pricing algorithm to help sellers be competitive and adjust prices based on the market demand.
Shipping options – Decide on the shipping options you will have for buyers.
Receiving payments – TCGplayer usually collects payments from buyers, processes the orders, and then deposits the money into your seller account. From there, you can withdraw your funds.
Maintain your inventory – Keep your inventory up to date. Remove sold items and add new ones to reflect the current availability of your Pokémon cards.
5. Card Cavern
Card Cavern is an online store that specializes in buying and selling Pokémon cards.
They have a straightforward buylist system where you can quickly find the cards they’re interested in and the prices they’re willing to pay.
Then, you ship your cards to them (they recommend purchasing tracking and insurance).
If you choose to sell your cards to Card Cavern, you’ll receive payment through PayPal or receive store credit, depending on your preference.
Their buy rates only apply to near-mint, English, tournament legal cards. You can send as many or as little Pokémon cards as you want to Card Cavern.
6. Dave & Adam’s
Dave & Adam’s is an online store for trading cards, including Pokémon cards, and it has been around for over 30 years.
They offer a buy list where you can see which cards they’re currently interested in purchasing. If your cards match their buy list, you can submit a sell request, ship your cards to them, and receive payment via check, PayPal, or store credit.
If you have a big collection, they will even travel to you.
7. Pokémon Facebook Groups
Pokémon Facebook Groups are communities of Pokémon card collectors and enthusiasts who use the platform to buy, sell, and trade cards. Pokémon Facebook Groups are exactly what you think – Facebook groups for Pokémon card collectors.
This can be a great place to sell your Pokémon cards because these groups are filled with people who are very interested in buying Pokémon cards.
These groups allow you to talk directly with fellow collectors and cater to various interests, such as specific regions, sets, or rarity levels.
To sell your Pokémon cards in these groups, make sure you follow group rules, post clear photos, and respond quickly to potential buyers’ inquiries.
8. CCG Castle
CCG Castle is a website that specializes in games since 2007.
They buy Pokémon cards that you no longer need and have a buy list on their site that will tell you exactly what they are accepting and how much they will pay you for it. They pay in either PayPal cash or store credit.
Best Places To Sell Pokemon Cards Near Me
If you’re looking to sell your collection or particular Pokémon cards, there are several options near you to consider. This section will cover the best local places where you can sell your cards, such as Facebook Marketplace, comic book stores, pawn shops, and Craigslist.
9. Facebook Marketplace
A popular and easy way to sell your Pokémon cards is through Facebook Marketplace. Nearly everyone has a Facebook account, so it can be easy for you to get started, and it allows you to connect with local buyers who might be interested in your cards.
Posting on Facebook Marketplace is simple, and you can include photos, descriptions, and set your price. Also, you can communicate with potential buyers through Facebook Messenger, making it easy to negotiate and set up a meeting location.
There are no listing fees when selling on Facebook Marketplace, which means that you get to keep everything you earn. But, you do have to handle everything yourself.
10. Local comic book stores
Comic book stores, particularly those that specialize in trading cards, card games, and board games, can be a great place to sell your collection.
Many local comic shops are interested in buying Pokémon cards to stock their inventory for other gamers and collectors.
You can visit stores in your local area, ask if they purchase Pokémon cards, and provide the store owner with a list or photos of your cards. They may make an offer on the spot or ask you to come back later. Remember, each comic store is different, so it’s a good idea to try a few stores near you to compare offers and don’t stop at just one.
11. Pawn shops
Another option to consider is pawn shops.
Pawn stores are known for buying various items, including sports cards and collectibles like Pokémon cards. Take your cards to a few pawn shops near you and see if they’re interested in buying your collection.
Keep in mind that pawn shops usually offer lower prices than other options (this is because selling Pokémon cards is not their sole business), but they can be a quick and convenient way to sell more popular cards.
12. Craigslist
Craigslist is a site for buying and selling various items locally – I’m sure you’ve heard of it. You can create a detailed listing for your Pokémon cards, including pictures, descriptions, and asking prices.
Interested buyers in your area can contact you, allowing you to arrange a meetup in a safe and convenient location.
Craigslist is usually a little more difficult to sell Pokémon cards on and that is because this site does not specialize solely in Pokémon cards and is very localized.
Where to Sell Pokemon Cards in Bulk
Selling your Pokémon cards in bulk may be something that you are interested in if you simply don’t have the time to look each one up.
When selling your Pokémon cards in bulk, it’s important to find the right platform. In this section, we’ll focus on three popular options: Full Grip Games, Safari Zone, and Sell2BBNovelties. With their unique offerings and easy-to-sell process, these companies can help you get the most value for your collection if you simply don’t have the time or have too many cards to sort through.
13. Full Grip Games
Full Grip Games is a local game shop in Ohio that buys bulk Pokémon cards online and in person.
At Full Grip Games, they make it easy for you to sell your bulk cards in increments of 100 or 1,000. Also, they accept rares and other card types as well. To make things simpler for you, their website has a bulk buy list that breaks down all the packs and cards they accept along with individual prices.
To get started, follow these easy steps:
Click on the “Buylist Instructions” link on their website.
Choose their full singles buylist or their bulk buylist.
Select the cards in your collection according to the buylist.
Review the pricing and total value of the cards submitted.
Once done, send the cards following their shipping instructions.
Once they receive your bulk cards, it will take them around one week to go through them. For the cards they accept, you can get paid via PayPal, store credit (you will get a 30% bonus if you choose the store credit option), or check via USPS mail.
14. Safari Zone
Safari Zone is another great option to consider for selling your Pokémon cards in bulk. They accept a wide range of cards, but they do need to be in near-mint condition.
Here’s what you should do to sell your cards on Safari Zone:
Create an account on the Safari Zone website.
Review the cards they purchase on their buy list.
Enter the card details.
After submitting the card information, you’ll receive a quote for your collection.
Ship your cards to Safari Zone, and they will process your payment after validating the cards.
Safari Zone only pays via store credit.
15. Sell2BBNovelties
Sell2BBNovelties is a website that has been around since 1999 that specializes in toys and collectibles, such as Pokémon cards.
They have an easy platform to sell your Pokémon cards in bulk and accept various card types, including rares, holographic, and common/uncommon cards.
To sell your Pokémon cards on Sell2BBNovelties, simply:
Go to their website and click on the “Buying Prices” tab.
Select the cards you’re selling according to their buying list.
When you’re ready, submit the form. You’ll receive a confirmation email with the total value of the cards and further instructions.
Ship your cards to Sell2BBNovelties, and they will process your payment upon receiving and verifying your cards.
You can receive payment for the cards they accept in either PayPal cash or store credit.
How to Make a Website to Sell Pokemon Cards
If you have the time and a lot of cards, you may even be interested in starting a website to sell your Pokémon cards.
Creating a website to sell your Pokémon cards is a great idea to reach a wider audience and have lower fees. Of course, there will be more work in this because you will be managing everything yourself.
Choose a platform and create your design – Look for an easy-to-use platform to build your website – my favorite is WordPress. You will want to pick a clean looking design that customers can look at on both computer and phone. Most platforms have a variety of premade themes that you can use. You can also personalize your website by adding your logo, choosing colors that represent your brand, and adding images.
Organize your products – Categorize your Pokémon cards by sets, rarity, or other criteria that make sense for your target audience. Clear product descriptions and high-quality images of each card will help potential buyers too.
Set up payment and shipping – Choose a payment gateway to securely process transactions. Options like PayPal, Stripe, or Square are widely used and reliable. Choose shipping options and rates based on your preferred carriers and shipping destinations.
Create valuable content – In addition to listing your Pokémon cards, consider creating helpful content such as blog posts or videos that add value to your website and attract more readers and buyers. Providing informative content will establish you as an expert in the field and help drive traffic to your site.
Promote your website – Use social media, search engine optimization (SEO), or even paid advertising to increase page views to your website.
Related: How To Start A Website Free Course
Pokemon Card Selling Tips and Strategies
Selling your Pokémon cards can be an exciting way to make extra money, but it’s important to have a little strategy so that you can make the most money and find the most buyers.
Here are some tips for selling your Pokémon cards successfully.
Determine the value of your cards. You should research how rare the card is, the origin, and the condition of your cards, as these factors will affect their worth. Keep an eye out for rare and valuable cards (such as first edition cards and illustrations), as these will attract more interest from collectors. Grading your cards can help with this process – professional grading services can rate the condition of your cards and encapsulate them in a case, increasing their value.
Consider where to sell your cards.There are numerous platforms for selling Pokémon cards online, such as eBay, where you can list your cards as single items or in an auction format. There are also more specialized Pokémon selling websites which are dedicated to trading cards. These sites often have dedicated communities of potential buyers who are very interested in Pokémon cards.
Write clear and accurate descriptions of your cards.You should always be clear and honest about your card’s condition. For example, are there any scratches or bends? Is there a tear or water damage?
Ship your cards carefully.Carefully package your Pokémon cards to protect your cards from damage during transit. You will want to keep your cards waterproof and not use rubber bands (rubber bands can damage the cards). Also, consider offering a tracking number and insurance to your buyer as an additional layer of security. Many of the Pokémon selling sites above have a very exact way they want you to ship the cards to them to prevent any damage, so be sure to see what their rules are.
By following these Pokémon card selling tips and tricks, you can increase the chances of finding the best places to sell your Pokémon cards.
Frequently Asked Questions
Here are answers to common questions about selling Pokémon cards.
How do I know if my Pokemon cards are worth money?
So, how do you know if the Pokémon cards that you have are worth anything? Many people have Pokémon cards, probably stuffed in a box somewhere, or maybe you came across some.
Whatever your reason is, yes, your Pokémon cards may be worth something.
Knowing the value of your Pokémon cards is important before selling, and there are a few key things to think about.
First, look at the rarity symbols on your cards: a circle indicates a common card, a square represents an uncommon card, and a star denotes a rare card. These symbols help you determine the rarity of your cards and their potential worth.
The condition of your cards also plays a big role in their value. Cards in mint condition, meaning they have no visible wear or damage, are worth more than cards with minor imperfections. Holographic cards, especially in mint condition, can be more valuable.
To take it a step further, you could even get your Pokémon cards professionally valued and graded by a reputable company like PSA. Grading involves a professional inspection of your card’s condition, assigning a numerical grade based on factors such as centering, corners, edges, and surface. The higher the graded number, the better the condition and, often, the higher the value.
Keep in mind that while Pokémon cards typically have higher values, other trading card games like Yu-Gi-Oh can also be valuable. Make sure to research the prices of similar cards sold recently, and compare the condition of your cards to decide if they’re worth selling.
How do I sell Pokemon cards for cash?
To sell your Pokémon cards for cash, first organize your cards by set and look for rare ones to see what you have. Once you’ve prepared your collection, follow the selling instructions on your chosen platform.
You can sell your Pokémon cards online, locally near you, and even in bulk.
Where can I find buyers for my Pokemon cards?
You can find buyers for your Pokémon cards on online marketplaces, local card shops, and social media groups. Websites like eBay and TCGplayer are popular places for selling Pokémon cards, as well as community forums and local collector’s events.
What are some reputable websites to sell Pokemon cards?
There are many reputable sites to sell Pokémon cards as we discussed above, such as:
eBay
Troll and Toad
Mercari
TCGplayer
Card Cavern
Dave & Adam’s
Pokémon Facebook Groups
Full Grip Games
Safari Zone
Sell2BBNovelties
Where is the best place to sell Pokemon cards?
The best place to sell your Pokémon cards depends on your preferences. eBay gives you a worldwide market and you are probably already familiar with their platform.
TCGplayer and Troll and Toad specialize in trading card sales and have a lot of Pokémon cards for sale.
Pokémon Facebook Groups are a great way to connect with those interested in Pokémon cards, and there are no listing fees – but you would be dealing with people on your own and handling everything yourself.
Are there any local stores that buy Pokemon cards?
Some local stores, like comic book shops, game stores, and pawn shops, may buy Pokémon cards. You can call local stores to see if they buy cards before bringing your collection in person.
Can you sell Pokemon cards on Etsy?
Etsy is generally geared towards handmade and vintage items, so it’s not an ideal platform for selling Pokémon cards. It’s best to stick with platforms like eBay, TCGplayer, or Troll and Toad for selling trading cards.
I did a search for Pokémon cards on Etsy and it said there were 43,326 results, but I think many of these are for custom art, in that they would be turning a picture of you or your pet into a Pokémon card. So, not the same thing.
Can I sell Pokemon cards on eBay?
Yes, you can sell Pokémon cards on eBay. It is one of the most popular sites for selling Pokémon cards and it gives you control over pricing and listing options.
Can you sell Pokemon cards at GameStop?
GameStop typically does not buy or sell individual Pokémon cards.
Do pawn shops buy Pokemon cards?
Some pawn shops may buy Pokémon cards, especially if they are valuable or rare. Call your local pawn shops or visit them in person to inquire about their interest in buying Pokémon cards. Remember, they do not specialize in Pokémon cards and have a smaller market, so you may not get as much for your Pokémon cards at a pawn store.
What does TCG and CCG mean?
As you’re going through the sites above looking for one of the best places to sell your Pokémon cards, you may come across these two terms. CCG means collectible card game and TCG means trading card game.
How can I determine the value of my Pokemon cards?
Figuring out the value of your Pokémon cards involves considering factors like:
rarity
condition
age
Websites like TCGplayer and Troll and Toad provide price guides and historical sales information to help you estimate the value of your cards.
How do I check the value of my Pokemon cards?
Check the value of your Pokémon cards by researching on websites like TCGplayer, eBay, and Pokémon Price. These platforms can give you a good idea of the current market value for individual cards.
Do you need a license to sell Pokemon cards?
You generally do not need a license to sell Pokémon cards, unless you’re planning to sell them by opening an in-person store. Check your local regulations to make sure you’re following any required guidelines.
How much is Charizard Pokemon card worth?
Charizard cards vary widely in value and can be worth anywhere from $25 to over $50,000. The Charizard Pokémon card that is worth the most is typically a mint condition 1st Edition from the base set.
What Pokemon cards are worth more than $100?
Some Pokémon cards worth more than $100 include rare Pokémon cards, such as first edition holographic cards from the original sets, high-grade cards, misprints, and promotional cards like the Pokémon Illustrator card.
What is the most expensive Pokemon card?
The most expensive Pokémon card varies over time; some examples include the Pokémon Illustrator card, the 1st Edition Charizard, or unique, one-of-a-kind promo cards handed out during official Pokémon events. The rarest Pokémon cards obviously cost more money and sell for more.
According to TCGplayer, the most expensive Pokémon cards include:
Pokémon World Championships No. 2 Trainer Promo
No. 2 Trainer Toshiyuki Yamaguchi (2000)
Neo Genesis 1st Edition Lugia (2000)
Super Secret Battle No. 1 Trainer (1999)
Family Event Trophy Kangaskhan (1998)
Test Print Blastoise Gold Border (1998)
Tsunekazu Ishihara Signed Promo (2017)
Trophy Pikachu No. 3 Trainer Bronze (1997)
Commissioned Presentation Blastoise Galaxy Star Holo (1998)
First Edition Shadowless Holographic Charizard #4 (1999)
Illustrator Pikachu (1998)
These were all sold for over $100,000 each.
Best Places To Sell Pokemon Cards – Summary
I hope you enjoyed this article on the best places to sell Pokémon cards and how to sell Pokémon cards for cash.
If you have Pokémon cards that you no longer want, there are many ways you can sell them. And, they may be worth a lot of money!
To figure out the value of the Pokémon cards that you want to sell, you’ll want to look at their rarity symbols, Pokémon card condition, grading (if applicable), and market comparisons. Understanding these factors will help you decide if your cards are worth selling and where to find the best prices.
Once your cards are sorted and evaluated, it’s now time to choose the best places to sell your Pokémon cards. Here are some popular options:
eBay – This site has millions of Pokémon cards sold every year. It’s a great place to find a worldwide audience, but remember to factor in shipping costs and eBay fees.
Facebook Marketplace and Pokémon Facebook Groups – Connect with local collectors or fans without worrying about shipping fees. This option may mean that you will meet the buyer in person.
Local comic shops – These stores can be an easy place to sell your cards, especially if they specialize in Pokémon cards or trading card games.
TCGplayer – Catering specifically to trading card game fans, this site has a dedicated space for buying and selling Pokémon cards.
Other options include Troll and Toad, Card Cavern, Dave & Adam’s, Sell2BBNovelties, pawn shops, and more.
Good luck selling your Pokémon cards!
What do you think is the best place to sell Pokemon cards for cash?
Market cap represents the total market value of a company’s outstanding shares. A company’s market capitalization, or market cap, provides a good measure of its size and value versus revenue or sales figures.
Knowing what the market cap is for a given company can help investors compare it to other companies of a similar size.
Note the market cap (the value of a company’s total equity) is different than a company’s market value, which is a more complex calculation based on various metrics, including return-on-equity, price-to-earnings, and more.
Recommended: What Is Market Value?
How to Calculate Market Cap
To figure out a company’s market cap, simply multiply the number of outstanding shares by the current price per share. If a company has 10 million outstanding shares of stock selling for $30 per share, the company’s market cap is $300 million.
Share prices fluctuate constantly, and as a result, so does market cap. You should be able to find the number of outstanding shares listed on a company’s balance sheet, where it’s referred to as “capital stock.” Companies update this number on their quarterly filings with the Securities and Exchange Commission (SEC).
Market Cap Formula
The formula for determining a company’s market cap is fairly simple:
Current price per share x Total # of outstanding shares = Market capitalization
Remember that the share price doesn’t determine the size of the company or vice versa. When measuring market cap you always have to look at the share price multiplied by the number of outstanding shares.
• Company A could be worth $100 per share, and have 50,000 shares outstanding, for a total market cap of $5 million.
• Company B could be worth $25 per share, and have 20 million shares outstanding, for a total market cap of $500 million.
Market Cap and Number of Shares
In some cases, market cap can change if the number of stocks increases or decreases. For example, a company may issue new stock or even buy back stock. When a company issues new shares, the stock price may dip as investors worry about dilution.
Stock splits do not increase market share, because the price of the stock is also split proportionally.
Changes to the number of shares are relatively rare, however. More commonly, investors will notice that changes in share price have the most frequent impact on changing market cap. 💡 Quick Tip: If you’re opening a brokerage account for the first time, consider starting with an amount of money you’re prepared to lose. Investing always includes the risk of loss, and until you’ve gained some experience, it’s probably wise to start small.
Market Cap Versus Stock Price
If you’re new to investing, you may assume a company’s share price is the clearest indicator of how large a company is. You may even assume it’s as important in choosing a stock as market cap.
While the share price of a company tells you how much it costs to own a piece of the company, it doesn’t really give you any hints as to the size of the company or how much the company is worth.
Market cap, on the other hand, might give you some hints about how a particular stock might behave. For example, large companies may be more stable and experience less volatility than their smaller counterparts.
Recommended: Intrinsic Value vs. Market Value
Market-Cap Categories
Analysts, as well as index and exchange-traded fund (ETF) providers commonly sort stocks into small-, mid-, and large-cap stocks, though some include a broader range that goes from micro or nano-cap stocks all the way to mega cap on the large end.
The size limits of these categories can change depending on market conditions but here are some rough parameters.
Nano-cap and Micro-cap Stocks
Nano- and micro-cap companies are those with a total market capitalization under $300 million. Some define nano-cap stocks as those under $50 million, and micro-cap stocks as those between $50 million and $300 million.
These smaller companies can be riskier than large-cap companies (though not always). Many microcap stocks trade over-the-counter (OTC). Over-the-counter stocks are not traded on a public exchange like the New York Stock Exchange (NYSE) or Nasdaq. Instead, these stocks are traded through a broker-dealer network.
As a result there may be less information available about these companies, which can make them difficult to assess.
Small-cap Stocks
Small-cap companies are considered to be in the $300 million to $2 billion range. They are generally younger and faster-growing than large-cap stocks. Investors often look to small-caps for growth opportunities.
While small-cap companies have historically outperformed large-caps, these stocks can also be more risky, and may require more due diligence from would-be investors.
Mid-cap
Mid-cap companies lie between small- and large-cap companies, with market caps of $2 billion to $10 billion.
Some investors may find mid-cap stocks attractive because they can offer some of the growth potential of small-caps with some of the maturity of large-caps. But mid-cap stocks likewise can share some of the downsides of those two categories, being somewhat vulnerable to competition in some cases, or lacking the impetus to expand in others.
Large-cap
Large-cap stocks are those valued between $10 billion and $200 billion, roughly. Large-cap companies tend not to offer the same kind of growth as small- and mid-cap companies. But what they may lack in performance they can deliver in terms of stability.
These are the companies that tend to be more well established, less vulnerable to sudden market shocks (and less likely to collapse). Some investors use large-cap stocks as a hedge against riskier investments.
Mega-cap
Mega cap describes the largest publicly traded companies based on their market capitalization. Mega cap stocks typically include industry-leading companies with highly recognizable brands with valuations above $200 billion.
Recommended: Investing 101 Guide
Evaluate Stocks Using Market Cap
Understanding the market cap of a company can help investors evaluate the company in the context of other companies of similar size.
For instance, as noted above market cap can clue investors into stocks’ potential risk and reward, in part because the size of a company can be related to where that company is in its business development. Investors can also evaluate how a company is doing by comparing its performance to an index that tracks other companies of a similar size, a process known as benchmarking.
• The S&P 500, a common benchmark, is a market-cap weighted index of the 500 largest publicly traded U.S. companies.
• The S&P MidCap 400, for example, is a market-cap weighted index that tracks mid-cap stocks.
• The Russell 2000 is a common benchmark index for small cap stocks.
Within this system, companies with higher market cap make up a greater proportion of the index. You may often hear the S&P 500 used as a proxy for how the stock market is doing on the whole. 💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.
What Market Cap Can Tell You
Here are some characteristics of larger market-cap companies versus smaller-cap stocks:
Volatility: Larger companies, also often dubbed blue-chip stocks, tend to be less volatile than smaller stocks and tend to offer steady returns. What’s more, compared to larger companies, they have relatively few resources, such as access to cheaper credit and access to liquidity.
Revenue: Larger stocks tend to have more international exposure when it comes to their sales and revenue streams. Meanwhile, smaller stocks can be more oriented to the domestic economy.
Growth: Smaller companies tend to have better odds of offering faster growth.
Valuation: Larger stocks tend to be more expensive than smaller ones and have higher valuations when it comes to metrics like price-to-earnings ratios.
Dividends: Many investors are also drawn to large cap stocks because companies of this size frequently pay out dividends. When reinvested, these dividends can be a powerful driver of growth inside investor portfolios.
Market Cap and Diversification
So how do you use market cap to help build a portfolio? Market cap can help you choose stocks that could help you diversify.
Building a diversified portfolio made up of a broad mix of investments is a strategy that can help mitigate risk.
That’s because different types of investments perform differently over time and depending on market conditions. This idea applies to stock from companies of varying sizes, as well. Depending on market conditions, small, medium, and large cap companies could each beat the market or trail behind.
Because large-cap companies tend to have more international exposure, they might be doing well when the global economy is showing signs of strength. On the flip side, because small-cap companies tend to have greater domestic exposure, they might do well when the U.S. economy is expected to be robust.
Recommended: Guide to Investing in International Stocks
Meanwhile, larger-cap companies could also be outperforming when there’s a downturn, because they may have more cash at hand and prove to be resilient. In recent years, the biggest companies in the U.S. have been linked to the technology. Therefore, picking by market cap can have an impact on what kind of sectors are in an investor’s portfolio as well.
What Is Free-Float Market Cap?
Float is the number of outstanding shares that are available for trading by the public. Therefore, free-float market cap is calculating market cap but excluding locked-in shares, typically those held by company executives.
For example, it’s common for companies to provide employees with stock options or restricted stock units as part of their compensation package. These become available to employees according to a vesting schedule. Before vesting, employees typically don’t have access to these shares and can’t sell them on the open market.
The free-float method of calculating market cap excludes shares that are not available on the open market, such as those that were awarded as part of compensation packages. As a result, the free-float calculation can be much smaller than the full market cap calculation.
However, this method could be considered to be a better way to understand market cap because it provides a more accurate representation of the movement of stocks that are currently in play. Many of the major indexes, such as the S&P 500 and the MSCI indices, use the free-float method.
Market Cap vs Enterprise Value
While market cap is the total value of shares outstanding, enterprise value includes any debt that the company has. Enterprise value also looks at the whole value of a company, rather than just the equity value.
Here is the formula for enterprise value (EV):
Market cap + market value of debt – cash and equivalents.
A more extended version of EV is here:
Common shares + preferred shares + market value of debt + minority interest – cash and equivalents.
The Takeaway
Market capitalization is a common way that analysts and investors describe the value and size of different companies. Market cap is simply the price per share multiplied by the number of outstanding shares. Given that prices fluctuate constantly, so does the market cap of each company, but the parameters are broad enough that investors generally know whether a company is a small cap vs. a mid cap vs. a large or mega cap.
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FAQ
What is the maximum market cap?
In theory there is no cap on market cap; i.e. there is no maximum size a company can be. As of Aug. 21, 2023, the top five biggest companies by market cap, according to Forbes, are: Apple ($2.744 trillion), Microsoft ($2.353 trillion), Saudi Aramco ($2.224 trillion), Alphabet (Google) ($1.624 trillion), Amazon ($1.336 trillion).
How does market cap go up?
A company’s market cap can grow if the share price goes up.
Are large-cap stocks good?
The market cap of any company is neither good nor bad; it’s simply a way to measure the company’s size and value relative to other companies in the same sector or industry. You can have mega cap companies that underperform and micro-cap companies that outperform.
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Wachovia today reported a third quarter loss of $23.9 billion, or $11.09 per share, compared to a profit of $1.7 billion, or 90 cents per share, a year earlier.
The enormous loss included an $18.8 billion goodwill impairment reflecting declining market valuations and terms of its impending merger with Wells Fargo.
“We believe that it was prudent for Wachovia to put these losses behind them,” said Wells Fargo’s Chief Financial Officer Howard Atkins, in a statement. “The asset write-downs, reserve build, and other items are consistent with our acquisition assumptions.
Another $6.6 billion was set aside as a credit loss provision, including $3.4 billion to build reserves for its nasty Pick-a-Pay mortgage portfolio, which is rapidly souring, especially in states like California and Florida.
Amazingly, Wachovia was pitching the loans as late as March of this year and originating them until late June, which makes you wonder who’s running these billion-dollar companies.
Regarding those Pick-a-Pay’s, 66 percent of borrowers have some deferred interest balance, and the current average loan-to-value is 95 percent, up from 71 percent upon loan origination.
Net charge-offs for all types of loans totaled $1.9 billion, or an annualized 1.57 percent of average net loans, up from 1.10 percent the previous quarter and 0.19 percent a year earlier.
Nonperforming assets, including foreclosed properties held for sale, totaled $15 billion, or 3.05 percent of loans, up from 2.41 percent in the second quarter and 0.66 percent last year.
Despite largely steering clear of the higher-risk mortgages, Wells Fargo will acquire a stable of the most toxic loans out there, in the form of billions worth of pay option arms.
Atkins said the merger is on track and expected to close in the fourth quarter as planned.
Total third quarter mortgage origination was $6.9 billion, down 57 percent from the second quarter and 64 percent from a year ago, reflecting more prudent lending criteria.
Shares of Wachovia were down nine cents, or 1.48%, to $6.00 in early morning trading on Wall Street.
Lender and appraisal management companies and other property data collection companies can now use Black Knight‘s Scout mobile property inspection as part of the value acceptance plus property data process.
With the cloud-based Scout app, users can easily collect detailed interior and exterior property data using a mobile device, Black Knight said Tuesday.
“By using Scout, lenders experience significant efficiencies and cost savings as well as greater data transparency, minimize the potential for bias and realize faster origination turn times,” Ben Graboske, president, Black Knight data & analytics, said in a statement.
The government-sponsored enterprise (GSE) approved six vendors following the roll-out of its new valuation initiative. The list includes some of the biggest names in the mortgage tech space — Solidifi, Class Valuation, Clear Capital, Mueller Services, Inc., Accurate Group and Black Knight‘s Collateral Analytics LLC.
Through built-in rules, users can input specific home characteristics and take photos based on Fannie Mae‘s proprietary data requirements, the company noted. GPS tracking and other measures to validate the photos and data are collected at the borrower’s property.
Fannie Mae‘s update of its Selling Guide, which occurred earlier this month and includes more options for property valuations, has stirred controversy.
Key to the new options are Fannie Mae’s Property Data API, by which Fannie “has established a property data standard and API to collect data and images consistently,” the GSE said. According to Fannie, the process encourages the use of emerging technologies to capture property information, imagery and floor plans.
It’s a welcome move for mortgage tech firms in terms of modernization in the industry.
“This is a standardized data collection done at the property, which brings objective, transparent data into the whole process,” Kenon Chen, executive vice president of strategy and growth at Clear Capital, said. “I think that not only drives this program, but paves the way for a better appraisal process when an appraisal is needed.”
Appraisers, however, have voiced a desire to shift as much appraisal work away from Fannie Mae as possible.
“I encourage all appraisers to take a very serious examination of their current business model,” Washington-based appraiser Dave Towne wrote on AppraisersBlog.com. “If the Fannie Mae trend continues, you won’t have any of that business in the future anyway.”
An exit strategy is a plan to leave an investment, ideally by selling it for more than the price at which it was purchased.
Individual investors, venture capitalists, stock traders, and business owners all use exit strategies that set specific criteria to dictate when they’ll get out of an investment. Every exit strategy plan is unique to its situation, in terms of timing and under which conditions an exit may occur.
What Is an Exit Strategy?
Broadly speaking, the exit strategy definition is a plan for leaving a specific situation. For instance, an employee who’s interested in changing jobs may form an exit strategy for leaving their current employer and moving on to their next one.
What is an exit strategy in a financial setting? In this case, the exit strategy definition is a plan crafted by business owners or investors that cover when they choose to liquidate their position in an investment. To liquidate means to convert securities or other assets to cash. Once this liquidation occurs, the individual or entity that executed the exit strategy no longer has a stake in the investment.
Creating an exit strategy prior to making an investment can be advantageous for managing and minimizing risk. It can also help with defining specific objectives for making an investment in the first place. In other words, formulating your exit strategy beforehand can give you clarity about what you hope to achieve.
Exit strategies often go overlooked, however, as investors, venture capitalists, and business owners may move ahead with an investment with no clear plan for leaving it. 💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.
How Exit Strategies Work
Investors use exit strategies to realize their profit or to mitigate potential losses from an investment or business. When creating an exit strategy, investors will typically define the conditions under which they’ll make their exit.
For instance, an exit strategy plan for investors may be contingent on achieving a certain level of returns when starting to invest in stocks, or reaching a maximum threshold of allowable losses. Once the contingency point is reached, the investor may choose to sell off their shares as dictated by their exit strategy.
A venture capital exit strategy, on the other hand, may have a predetermined time element. Venture capitalists invest money in startups and early stage companies. The exit point for a venture capitalist may be a startup’s IPO or initial public offering.
Again, all exit strategies revolve around a plan. The mechanism by which an individual or entity makes their exit can vary, but the end result is the same: to leave an investment or business.
When Should an Exit Strategy Be Used?
There are different scenarios when an exit strategy may come into play. For example, exit strategies can be useful in these types of situations:
• Creating a succession plan to transfer ownership of a profitable business to someone else.
• Shutting down a business and liquidating its assets.
• Withdrawing from a venture capital investment or angel investment.
• Selling stocks or other securities to minimize losses.
• Giving up control of a company or merging it with another company.
Generally speaking, an exit strategy makes sense for any situation where you need or want to have a plan for getting out.
Exit Strategy Examples
Here are some different exit strategy examples that explain how exit strategies can be useful to investors, business owners, and venture capitalists.
Exit Strategy for Investors
When creating an exit strategy for stocks and investing, including how to buy stocks, there are different metrics you can use to determine when to get out. For example, say you buy 100 shares of XYZ stock. You could plan your exit strategy based on:
• Earning target return from the investment
• Realizing a maximum loss on the investment
• How long you want to stay invested
Say your goal is to earn a 10% return on the 100 shares you purchased. Once you reach that 10% threshold you may decide to exit while the market is up and sell your shares at a profit. Or, you may set your maximum loss threshold at 5%. If the stock dips and hits that 5% mark, you could sell to head off further losses.
You may also use time as your guide for making an exit strategy for stocks. For instance, if you’re 30 years old now and favor a buy-and-hold strategy, you may plan to make your exit years down the line. On the other hand, if you’re interested in short-term gains, you may have a much shorter window in which to complete your exit strategy.
Exit strategies can work for more than just stock investments. For instance, you may have invested in crowdfunding investments, such as real estate crowdfunding or peer-to-peer lending. Both types of investments typically have a set holding period that you can build into your exit plan.
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Exit Strategy for Business Owners
An exit strategy for business owners can take different forms, depending on the nature of the business. For instance, if you run a family-owned business then your exit strategy plan might revolve around your eventual retirement. If you have a fixed retirement date in mind your exit plan could specify that you will transfer ownership of the business to your children or sell it to another person or company.
Another possibility for an exit strategy may involve selling off assets and closing the business altogether. This is something a business owner may consider if the business is not turning a profit, and it looks increasingly unlikely that it will. Liquidation can allow a business owner to repay their creditors and walk away from a failed business without having to file bankruptcy.
Exit Strategy for Startups
With startups and larger companies, exit strategies can be more complex. Examples of exit strategy plans may include:
• Launching an IPO to allow one or more founders to make an exit
• A merger or acquisition that allows for a transfer of ownership
• Selling the company
• Liquidating assets and shutting the company down
If a founder is ready to move on to their next project, they can use an IPO to leave the company intact while extricating themselves from it. And angel investors or venture capitalists who invested in the company early on also have an opportunity to sell their shares.
Startup exit strategies can also create possible opportunities for some investors. IPO investing allows investors to buy shares of companies when they go public.
The mechanics of using an IPO as an exit strategy can be complicated, however. There are IPO valuations and regulatory requirements to consider.
It’s important for startup founders to know how to value a business before taking it public to ensure that an IPO is successful. And early-stage investors may have to observe IPO lock-up period restrictions before they can sell their shares. 💡 Quick Tip: IPO stocks can get a lot of media hype. But savvy investors know that where there’s buzz there can also be higher-than-warranted valuations. IPO shares might spike or plunge (or both), so investing in IPOs may not be suitable for investors with short time horizons.
5 Types of Exit Strategies
There are different types of exit strategies depending on whether you’re an investor, a business owner, or a venture capitalist. Some common exit strategies include:
1. Selling Shares of Stock
Investors can use an exit strategy to set a specific goal with their investment (say, 12%), reach a certain level of profit, or determine a point at which they’ll minimize their loss if the investment loses value. Once they reach the target they’ve set, the investor can execute the exit strategy and sell their shares.
2. Mergers and Acquisitions
With this business exit strategy, another business, often a rival, buys out a business and the founder can exit and shareholders may profit. However, there are many regulatory factors to consider, such as antitrust laws.
3. Selling Assets and Closing a Business
If a business is failing, the owner may choose to liquidate all the assets, pay off debts as well as any shareholders, if possible, and then close down the business. A failing business might also declare bankruptcy, but that’s typically a last resort.
4. Transferring Ownership of a Business
This exit strategy may be used with a family-run business. The owner may formulate an exit plan that allows him to transfer the business to a relative or sell it at a particular time so that he or she can retire or do something else.
5. Launching an IPO
By going public with an IPO, the founder of a startup or other company can leave the company if they choose to, while leaving the business intact. As noted, using an IPO as an exit strategy can be quite complicated for business founders and investors because of regulatory requirements, IPO valuations, and lock-up period restrictions.
Why Exit Strategies Are Important
Exit strategies matter because they offer a measure of predictability in a business or investment setting. If you own a business, for example, having an exit strategy in place that allows you to retire on schedule means you’re not having to work longer than you planned or want to.
An exit strategy for investors can help with staying focused on an end goal, rather than following the crowd, succumbing to emotions, or attempting to time the market. For example, if you go into an investment knowing that your exit plan is designed to limit your losses to 5%, you’ll know ahead of time when you should sell.
Using an exit strategy can prevent doubling or tripling losses that could occur when staying in an investment in the hopes that it will eventually turn around. Exit strategies can also keep you from staying invested too long in an investment that’s doing well. The market moves in cycles and what goes up eventually comes down.
If you’re on a winning streak with a particular stock, you may be tempted to stay invested indefinitely. But having an exit strategy and a set end date for cashing out could help you avoid losses if volatility sends the stock’s price spiraling.
How To Develop an Exit Strategy Plan
Developing an exit strategy may look different, depending on whether it involves an investment or business situation. But the fundamentals are the same, in that it’s important to consider:
• What form an exit will take (i.e. liquidation, IPO, selling shares, etc.)
• Whether an exit is results-based or time-based (i.e. realizing a 10% return, reaching your target retirement date, etc.)
• Key risk factors that may influence outcomes
• Reasons and goals for pursuing an exit strategy
If you’re an individual investor, you may need to formulate an exit plan for each investment you own. For instance, how you exit from a stock investment may be different from how you sell off bonds. And if you’re taking on riskier investments, such as cryptocurrency, your exit strategy may need to account for the additional volatility involved.
For business owners and founders, exit strategy planning may be a group discussion that involves partners, members of the board, or other individuals who may have an interest in the sale, transfer, or IPO of a company. In either situation, developing an exit strategy is something that’s best done sooner, rather than later.
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FAQ
What are different exit strategies?
Examples of some different exit strategies include selling shares of a stock once an investor realizes a certain return or profit, transferring ownership of a family business so an owner can retire, or selling all the assets and closing down a failing business.
What are the most common exit strategies?
The most common exit strategies depend on whether you’re an investor, the owner of an established business, or the founder of a startup. For investors, the most common exit strategy is to sell shares of stock once they reach a certain target or profit level. For owners of an established business, the most common exit strategy is mergers and acquisitions, because doing so is often favorable to shareholders. For founders of startups, a common exit strategy is an initial public offering (IPO).
What is the simplest exit strategy?
For an investor, the simplest exit strategy is to sell shares of stock once they reach a certain profit or target level of return. At that point they can sell their shares for more money than they paid for them.
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When Warren Buffett-led conglomerate Berkshire Hathaway(BRK.A -0.07%) (BRK.B -0.11%) recently released an updated look at its massive stock portfolio, we learned that Buffett and his team added shares of not one, but three different homebuilders. Berkshire bought D.R. Horton(DHI 0.59%), NVR (NVR 0.96%), and Lennar(LEN 0.01%), with a combined investment value of nearly $800 million.
While these are all excellent homebuilders with strong track records of growth, as well as attractive valuations, there’s one homebuilder stock I’ve been buying in my own portfolio that I believe could perform even better for patient long-term investors. Here’s a rundown of why Buffett might be so attracted to homebuilder stocks right now, and why I prefer to invest in the homebuilding industry with smaller player Dream Finders Homes(DFH 0.80%) instead.
Why homebuilders?
Let’s not sugar-coat it. The real estate market in the United States is pretty bad right now. A combination of soaring home prices and mortgage rates at multi-decade highs has pushed many would-be homebuyers to the sidelines.
However, there are always some people who need homes. People still get transferred to a different part of the country for their jobs, and some people need to move to be closer to relatives or friends. And this is where homebuilders are winning.
In simple terms, existing home inventory is extremely low. Roughly half of pre-pandemic levels. Millions of homeowners have mortgages with 3% (or even lower) interest rates and don’t want to give them up. So, new homes are making up a disproportionate percentage of available homes on the market. Not only that, but homebuilders have the ability to offer incentives – including promotional mortgage rates – that private sellers can’t.
Why Dream Finders Homes?
There are two key factors that make Dream Finders stand out.
First, Dream Finders uses the same land-light business model that NVR uses. The short version is that unlike most homebuilders, Dream Finders and NVR don’t buy any land until they’re ready to start building a home on it. They don’t buy large tracts of land to gradually build on. This keeps capital requirements low and allows the business to regularly generate returns on equity of 40% or more.
Second, Dream Finders is in the relatively early stages of growth and focuses on some of the fastest-growing Sun Belt housing markets in the United States. In addition to its home market of Jacksonville, Dream Finders also has a large presence in Orlando, the Carolinas, Texas, and other markets where homes are still (relatively) affordable, and job and wage growth exceeds the national average.
The company’s track record has been impressive so far. Founder and CEO Patrick Zalupski started the building in the wake of the Great Recession in 2009 and has grown it to the point where it expects to close on 6,500 homes this year, despite the difficult market. And speaking of the difficult real estate market, in the second quarter, Dream Finders grew its revenue by 19% year-over-year and ended with a backlog of nearly 5,300 homes.
To be fair, we don’t know for sure that Buffett and his team don’t like Dream Finders. With a market cap of just $2.5 billion, it could simply be too small to attract Buffett’s attention. The smallest of Buffett’s three builders has a market cap that is about eight times Dream Finders’ size. But if you’re a long-term investor, Dream Finders is making all the right moves to evolve into one of the major players in the space in the years to come.
An attractive valuation, even after incredible stock performance
The market has certainly acknowledged Dream Finders’ strong results and the better-than-expected environment for homebuilders in general. Since the beginning of 2023, Dream Finders’ stock price has roughly tripled.
Even so, it looks like an attractive stock at these levels. The real estate market is bad all around – it’s just better for homebuilders than for existing homes, but it’s still not great. There is tremendous appetite for household formation, which could be a massive catalyst for the entry-level homes Dream Finders does so well, once inflation and economic fears normalize. Even after its tremendous performance so far this year, Dream Finders still trades for less than 13 times forward earnings. I’ve added to my own position at these levels, and plan to keep incrementally building it for as long as the company keeps producing strong results.
Matthew Frankel, CFP® has positions in Berkshire Hathaway and Dream Finders Homes. The Motley Fool has positions in and recommends Berkshire Hathaway, Dream Finders Homes, Lennar, and NVR. The Motley Fool has a disclosure policy.