THWC 435: Is PSA Value Level Gone Forever?

What's up? Everybody happy with Cage episode 435 brought to you by Arena Club. Buy card ladder use code cage. Save yourself a couple bucks. Got the gold hat on again. As luck would have it, you know, it's Olympics color war for the kids camp. I wore this gold hat yesterday and they came home, they were on the gold team. So it's gonna be gold for three days to all. Gold, gold, gold for victory here. That one, the Philly show, which is coming up pretty soon. Well before that this coming weekend is the east coast national in, in White Plains. That should be a fun show. Also a nice three day show. I'll make this a quick one today, guys. So if you're going for a long walk, you may have to go back and play. The last couple two episodes ago I talked about his PSA killing the hobby, and it is my most watched episode in a while. It really resonated with you. And it's funny because I, I did that episode kind of without any, any planning at all. Somebody just messaged me in the morning and said, hey, you know, what happens with this? You know, what, what happens, you know, with PSA not opening? What happens with, you know, with liquidity of cards and repacks and the whole deal? And you know, just instead of texting back, I kind of just went on hit record and gave my answer in the form of an episode and then send them a link. So it's pretty funny. It's a good way to respond to a text message from a hobby friend, I guess is to come on here and just, you know, spill. But I will tell you that in doing that episode, I got even more questions from people, you know, more reactions for people. And it's, it's amazing, right? Hobby has recurring questions, right? Can the prices sustain, you know, Ken, what's going on with Michael Jordan and LeBron and Kobe and Brady cards? Is this something that's sustainable? Is there a pump? And you know, when's the inevitable dump which leads to the, you know, what inning are we in and when's this whole thing gonna come down and collapse and you know, this is a house of cards and blah, blah, blah. You know, those are the questions that everybody has on their mind, which I guess is fair, right? You know, everybody is in this great space where they're all doing well. Prices have pretty consistently gone up. And that makes sense if you look at the volume numbers, the amount of demand that there is for cards. We talk about, you know, a $700 million, you know, auction volume in A month. And you know, if you were to tell me that he know, sometime in the next six months to a year, we had a month where there's a billion dollars worth of volume tracked on the card ladder, you know, sales tracker, I would not be surprised. And that should tell you a lot because, you know, the hobby wasn't doing numbers, anything like that even last year. But it just, it seems like there is so much pent up growth, so much, you know, demand there, you know, so many people who want to join the space now, which, you know, that's usually a healthy indicator. It's not just the same people in here kind of churning cards. There's plenty of that. But it seems like every show there's somebody else. My son was on the phone, you know, with a friend last night asking about the show and seeing if we were gonna go and make sure we tell them what day we're going up to White Plains, you know, to go to the show and maybe he can go with us. And you know, of course my son offered a ride. But that's fun, right? I mean, it keeps people in it and then these two knuckleheads will talk to other friends and all of a sudden everybody's in it. And I'm sure that's not the only conversation like that that's happening. So the growth is there. The, the interesting thing for me is with all the growth, one of the pillars of the hobby, one of the, you know, the foundational pieces of this, you know, and I think it's fair to say that, right, I mean, Fanatics is obviously a foundation, foundational piece of the space. They're making all the cards. If there was a problem at Fanatics, there would be an overall problem in the space because you wouldn't have all these releases, you wouldn't have cards for the breakers to open, for people to open, for, you know, consumers open. You wouldn't have this constant Willy Wonka Goldin ticket chase. The cards would not be continuing to come out every couple of weeks with something else in the news. You know, we have the Cooper Flag debut that's going to eventually get sold or come to auction. It's going to make headlines. And then next thing you know, you know, August 21st, the first Topps flagship football will be released for 2026 and there'll be chases for Mendoza and chases for all other stuff. So I mean, I think it's fair to say that, you know, Fanatics plays a humongous role in the success of the space. And if we, you know, if we had a hiccup with them, an issue with them that would really have a catastrophic impact with the space. I put PSA in the same category and I don't know how many other companies I put in that category. There are a lot of other big companies that want to be involved in the space. Obviously ebay does a huge amount of business in the space, but they are not a hobby only company. You know, as much as they do in cards, they do in, you know, automotive parts and other, you know, segments and other categories as well. You know, Fanatics, obviously they sell sports merchandise, but tops in and of itself here. I mean this is a huge, huge thing for the hobby. You know, if ebay, you know, had an issue, Yu-Gi-Oh it would impact it. But you know, people buy their cards in a bunch of other places. Psa, there are competitors, there are alternatives. But one, they, they bought two of their competitors and three, the only other people who are out there, they just haven't had the adoption rates that PSA has. Folks do not use the competitor grading companies to PSA at any real scale whatsoever. And if they did, now would be the time that you saw that. And the question that I'm getting that I'm going to answer here now, is PSA value level gone forever. That's going to be my episode. But it's more than that, right? PSA is scaling up. Right. And, and what I'm going to tell you now is right here on their website. Right? So you can see this yourself on their website. We're going to go back a month ago because I record this here on August 12th, early in the morning on July 14th, 2026, a full month ago. Okay. This is a month before Fanatics Fest, before the national where they were taking in submissions, where people specifically, specifically went and gave so many submissions in that they had to like shut down grading at the national. Shut down, you know, returning cards there, right. July 14th. The first sentence on the page is the backlog currently stands at 11 million units. 11 million units. With our output continuing to accelerate, their grading projections for July are on track to surpass June's record pace, which means the demand is even more. They have a backlog, the demand is even higher right now. They gave an update in on July 28th saying that the global infrastructure scale up continues with the launch of the fifth grading facility in Texas, now open as a full grading facility. They're immediately increasing capacity moving forward. Okay, so that was also in July. So July 14, the backlog again, 11 million units on August 11. Yesterday they put out another update. The backlog, you know, with all of the. With all of the things that they're doing to catch up with all of the new graded, a fifth grading facility, they were at 11 million on July 14. One month ago, on August 11, July officially set another company milestone, surpassing June's record for total monthly graded units. So they are grading more than they've ever graded. So in July, they had a new record for the amount of cards they graded in a month. The backlog, which was 11 million on July 14, is now 11.85 million units. So even after grading a record number and opening up a new facility, a fifth grading facility, their grading backlog from July 14, 11 million is now up 850,000 units on August 11 to 11.85 million. They're going to have to continue to scale. They're going to have to continue to grow. They're going to have to continue to grade more. Because people are speaking, they are not going to other grading companies. They are not deciding to stop sending cards to psa even though there's no value level, even though there's no bulk grading, even though your collector's club grading is not where you're going with your cards, it doesn't matter. They graded more cards this month. While those lower levels were closed than they've ever graded before, their cost to grade at national was higher than it ever was at. And people still submitted so many cards that they had to shut down grading and Goldin return the cards to people. What does this tell you? Tells you, like I said, PSA is one of those foundational pieces in the hobby, one of those things that if it goes away is real problematic. So the question, what happens if they don't have value grading? It's an easy answer. It doesn't matter. People are showing you that it doesn't matter. They're showing you that if PSA comes back and opens up and says, hey, guys, we used to grade at $8. We used to grade at $15. We used to grade at 18 or 16 for bulk. We used to have a $20 level. We're just not going to be able to do that anymore. We're going to have you grade at, you know, 35 or whatever, $40 a card, people will still send them a record number. I imagine when they say their backlog is low enough that they're going to open up, they're going to get their biggest month of influx of cards. Because I know people are sitting on cards now. What does that mean for your lower Lower end cards, right? The cards that people used to grade. Well, it means that there's going to be a shift. It means that you're not going to be able to send in to PSA those cards that were raw, 10, 15, $20 cards that, you know, when you graded them became hundred, 150, 100, you know, 200 cards. Because the, the math is not going to work. You know, the value proposition for that is not going to work. And maybe that is a change that's necessary, right? Because maybe not every card should be graded at that level. I have a feeling that's not what's going to happen. You know, I'd like to say Raw is going to become a thing again. It's just not the way that it works. Because we've seen that. We've had that conversation. We've had that argument before during COVID Oh, PSA is closed. Grading is closed. RAW is going to. As soon as grading is open, people grade. Right? It provides a liquidity. It provides sort of like a, you know, a certainty for cards. It makes it easier to sell. It's in a slab, right? Because it's in a slab, people know what they're getting. People know what they're buying. People know that they can trust what the grade is, that it's authentic. And people don't have to worry about it. People don't have to worry what the card is. I just disappeared just like PSA did for a second. Had to go into the door. Sorry about that, guys. But maybe the upshot is maybe Beckett, maybe sgc, maybe PSA develops instead of grading tiers within psa, that PSA is the company that you grade with if your card deserves to be graded at 35 or $40. And if you just want your card in a slab, you just want some, you know, grading of it, some authenticity of it, because you're going to sell it or put it in a repack or whatever it might be. Well, maybe Beckett steps up, maybe SGC steps up, or maybe a competitor to collectors will actually fill that space, right? Maybe that's where CGC operates. The interesting part of this conversation is that so much of the backlog is that value level in tcg. And I have to think that PSA is having these conversations internally now that if we get rid of that value level, we are getting rid of so much volume, I don't know whether or not they are gonna care because if they have more cards coming in than they could possibly grade still. Now, when the value levels closed, right? If July Set a record. And I and you and everybody else can't send in those Pokemon cards, those low level sports cards, then maybe the PSA model is fine as it is. Maybe they have now done a test by closing down and have the answer that they need, which is people will still grade with them at a higher level. They'll just be more selective about what cards they send in. And PSA can grade less and make the same, maybe even make more. I'm curious to see what happens, but anybody who's out there telling you Raw is going to be a thing again. Raw has always been a thing in tcg. People have always, you know, been okay with buying and selling Pokemon cards. Raw, not so much in sports. Now will it. Will there be a little bit of, you know, of an increase in it? Sure. I'm already seeing a little more Raw at card shows because, you know, that's just what happens when grading slows down and grading, you know, closes down. But it's never, oh, Yu-Gi-Oh this is great. This is the thing, you know, there are a lot of people out there who would hope for that. People send me messages saying, you know, Raw. We used to always just do Raw. In today's world, it's very hard to do that. There are so many downtowns being faked, so many Fleer Jordans being faked, that for cards at a certain level, like the ones I just named, you have to grade them. You have to have that card graded just for some safety, some security to weed out the bad actors. But not every card needs to be graded. I'm curious to see what PSA does when they come back. I have a feeling that PSA value level may be gone. It may not be forever gone, but I think it may be gone for a very long time. Because if you're sitting there at psa, you have to be saying to yourself, why do we need it? We just took in more cards than we've ever taken in. We've just graded more cards than we've ever graded and we didn't have that value level. So what do we need it for now? Maybe after six months of grading and maybe after continuing to scale up, they could open up the value level back up again and have people grade with them. And, you know, maybe there'll be one facility that's the value level facility and, you know, maybe they'll figure out a way to make it work. It seems to me like it makes sense for them to do so. If I had a company that had this much demand, I sure as hell would be trying to figure out a way to meet that demand, because if you don't, somebody else is going to take those dollars from you. So I don't know. Is PSA killing the hobby? My answer was no. Is PSA value level gone forever? It may be gone for the time being. I don't know if forever is going to be the case, but I don't think we see value creating for quite some time, maybe a year, maybe even longer. Because PSA has so much demand, people want to agree with them so much that they are having a real hard time decreasing this backlog. And I mean, it was up to 12 and change million and now it's 11.85. You know, I think they knocked off like 600,000 off the backlog. The backlog is 11 million and they're knocking $600,000 off every 600,000 units off on a monthly basis. What does that mean? Right. It's going to take them 10 months to knock off half of it. You know, we're talking about a year and a half before that backlog is closed. We're talking about the backlog lasting into 2028. I have a feeling they are going to continue to ramp up and cut that down a little bit. But just the simple math of it tells you, you know, last month they were 12 and change. This month they were 11 and change and they knocked off 600,000. If that's going to be what they do on a monthly basis. And by the way, that was a month where they graded more cards than they've ever graded before. It's gonna take a while for this backlog to be closed. And, I mean, that's not a good thing. But the funny part is that I don't see prices going down while this is happening. I don't see repacks collapsing. I don't see any indication that this shift in what PSA is grading and how much they're grading for is causing any real detrimental problems to the. I have a feeling when PSA does reopen, it's gonna be very, very different. But that's just me, just one man's opinion. And for whatever reason, you guys listen to it, mostly because you hate me, which, you know, I love those YouTube comments. Keep them coming. And that's it, guys. Another episode brought to you by Arena Club by Card Ladder and the Gold Team today and by the Philly Show. If you're signing up for Card Ladder, use code cage. Save yourself a couple bucks. I'll talk to you guys soon. Take care, everybody.