Can you invest in sneaker stocks? I’m not talking about your leather or crocodile skin shoes, but vintage and collectible sneakers worn by athletes or celebrities. In the 1980s, Michael Jordan signed an exclusive deal with Nike, and his signature Air Jordan brand came to life.
That marked the beginning of a new era for sneakers. In the last decade, shops opened in big cities where limited edition shoes can be sold. Many queue in line for hours for a chance to buy them. The same happens online on many exclusive platforms such as Nike (SNKRS), Adidas (CONFIRMED), and more.
In 2020, the sneaker resale market was worth $2B in North America alone. Globally, the market expects to reach $30B by 2030. Are exclusive sneakers the new Rolex? Let’s look at how you can invest in sneakers in the real world as a commodity and on the stock market.
Chart by TradingView
Table of Contents
How to Invest in the Resale Sneakers Market
When you begin investing, one of the fundamental rules is to diversify your portfolio. When it comes to sneakers, that rule doesn’t apply. You can collect different pairs of limited-edition Nike shoes without risking losing your investment.
You can even think of them as recession-proof. During the pandemic, Nike collaborated with Dior and released 8,000 pairs of shoes to the public. They sold out in seconds for $2,000. These sneakers were worth $28,000 at their peak, but today, they can be sold for over $10,000.
That is just one example of Yeezy (Adidas) sneakers, Supreme, Louis Vuitton, and Ben & Jerry’s collaboration with Nike. Not all collaborations are a success. If you have a good eye, you can sense which pairs will be a success when others won’t.
Here are some factors that determine the value of a pair of sneakers and should affect sneaker stocks.
What Makes Sneaker Stocks Valuable
As for sneaker stocks in the stock market, there is a supply and demand for sneakers. The price varies depending on some factors.
Brand
Nowadays, the brand name is very important. Our generation will spend money just for the brand regardless of the comfort. Nike, Adidas, Supreme, Off-White, and a few other companies are the most important in the sneaker business. Unlike stocks, there isn’t a high-risk, high-reward scenario for sneakers. You buy what the people like.
Collaborations
Collaborations aren’t only between brands. Many celebrities, such as Kendrick Lamar, Cardi B, Justin Timberlake, Donald Glover, Lil Nas X, and others, have done successful sneaker collaborations. The goal is to generate hype for the artists and the brand’s young and hip customers and families.
Hype
When a celebrity wears a pair during an important event, it creates hype around the pair. Two good examples are Kanye’s Yeezy pair, which he wore during the Grammy Awards. The second is MJ’s pair worn during an exhibition game in Italy, where he broke the backboard during a slam dunk. There is still a piece of glass in those 1985 shoes.
Limited Edition
Let’s go back to the Dior x Nike example. Only 8,000 pairs were released to the public, and 7,000 more to exclusive Dior customers. The price currently hovers around $10,000. The price will surely decrease if additional pairs are re-released because the exclusivity factor diminishes. You hit the jackpot if you own a pair that is sought-after and hard to find.
Benefits of Investing in Resale Sneakers
You don’t need much capital or knowledge to invest in resale sneakers or sneaker stocks. You can start small and find limited edition shoes online or in-store and resale them online. If you do a minimum of research, you will see many events where limited edition sneaker launches.
If you are lucky, you can immediately resell those sneakers for a large profit in a competitive market.
Here are some of the best websites to resale your sneakers:
- StockX (the Bloomberg terminal of sneakers with market trends and data)
- GOAT (over 300,000 unique items on sale)
How to Trade Sneaker Stocks
If you prefer to stick to the stock market instead of the resale market, Nike and Adidas are publicly traded sneaker stocks. Here’s a quick resume of both shoe giants.
1. Nike (NYSE: NKE)
First among our sneaker stocks is Nike. Nike’s revenues and profits have grown yearly since 2009 (except during the pandemic in 2020). The company is well ahead of competitors regarding key metrics, but it still has to face many challenges.
First, Nike has often been accused of poor child labor policies in poor countries. More recently, it is facing some pressure due to inflation. While the rich can afford to play in the resale market, others can’t always afford a common $200 pair of Nike shoes.
Since its all-time high set in November 2021, Nike’s stock price has fallen by over 45%. Despite some difficulties, analysts are still optimistic Nike will bounce back in the upcoming months.
Nike annual dividend yield: 1.39%
2. Adidas (OTCMKTS: ADDYY)
Adidas is a German sneaker stocks company that trades on the OTC market. The company is worth about one-quarter as much as Nike. Its financials are good but inconsistent. Revenues and profits aren’t increasing at the same rate as Nike, and QoQ sometimes lessens.
Despite all this, it is a very popular brand among celebrities (Kanye West), athletes (especially basketball players), and people of all ages worldwide. In recent years, Nike’s stock has been trending similarly.
However, in the last months, there has been a lot more optimism, and Adidas has recovered very well and is setting new 2023 highs every month. The battle between Nike and Adidas is hot in the real world and the stock market.
Adidas annual dividend yield: 0.26%
3. Public.com
Not many sneaker stocks investors in the US have heard of Public. This platform allows accredited and non-accredited investors to buy fractional shares of alternative assets such as art, sneakers, or collectibles.
You can also open a brokerage account and invest in more than 9,000 stocks and some cryptocurrencies. Public’s team acquires various items and has them securitized with the Securities and Exchange Commission (SEC). The items get turned into fractional shares for the financial market.
Public members can buy and sell alternative assets on the platform. A daily clearing price sets their prices. Public keeps 10% of the profits, and the rest gets distributed to the item’s shareholders. You can only participate on Public’s platform if you are a US citizen or resident with a bank account. It’s your one-stop for various types of investments.
Final Thoughts: Sneaker Stocks
To conclude, sneakers are a very hot commodity, and their market is increasing yearly. I’ve met many people with dozens of pairs at home waiting to sell for a considerable profit. Sneakers aren’t a conventional investment because they don’t have any real use in the real world other than showing off. However, you can’t put a price on style.
Today’s young and hip generation will spend money on almost anything to get likes and attention. Today, you can invest in sneakers in the resale market, sneaker stocks on the stock market, and as an alternative investment.
Frequently Asked Questions
Sneaker stocks investing, as well as reselling is lucrative. You can sell for a higher price than you bought the sneakers at. And if you get a good stock entry, you can also profit.
Reselling sneakers is a big business. That market currently sits at around $2 billion.
Nike is the number one sneaker brand in both shoe sales and sneaker stocks.
Sneaker stocks like Nike are legit. Sneaker websites like StockX are also legit.
