Making sense of OpenSea at a $13B valuation – TechCrunch

OpenSea, the famous NFT Market raised a $300 million round at a valuation of $13.3 billion. The newcomer broke the news yesterday before the company confirmed the deal.

For critics of today’s crypto-economy and the NFT market, the round is perhaps more evidence of just how frenetic things have become. After all, OpenSea last raised a fraction of its new valuation less than a year ago, adding $100 million to its accounts at a $1.5 billion valuation in July.

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This kind of evaluation should refer to the extravagant speculation among the investing classes, right? Well, let’s find out.

OpenSea is a simple and straightforward business to understand. As I wrote during my winter vacation, the company takes 2.5% of transactions on its service. This means that we can track its total trading volume and come up with rough estimates of its volume.

Can we be accurate? No. Can we learn enough to better understand why OpenSea has been able to command such massive screening and towering evaluation? Yes I think so.

I want to find out how the new OpenSea rating aligns with its revenue. From there, we’ll ask if the company feels undervalued or overvalued. This is going to be a fun journey to collect data and do simple math magic. Let’s do some thinking!

OpenSea’s NFT Works

The simplest way to get an indicator on the OpenSea scale is to simply check the 30-day lagging trading volume and apply a 2.5% take rate to the total. According to crypto data source Dappradar, OpenSea has seen a trading volume of $2.91 billion in the last 30 days. This works out to an OpenSea net projected total of $72.75 million.

This is a month, mind. If we take that odd period and multiply it to generate the annual run rate number, OpenSea is on track to see $34.92 billion in volume, generating $873 million in total revenue over 12 months.

There are other ways to get our hands on the company scale. Data from Dune Analytics collected by @rchen8 contains more accurate historical data to analyze. Per Dune, OpenSea saw trading volumes of $3.25 billion in December, $2.37 billion in November, and $2.64 billion in October. Taken together, these numbers come to $8.26 billion in size, and a cut of 2.5% of that would be worth $206.5 million.

If we extrapolate this final figure to a full year census, it turns out to be an annual run rate of $826 million. That’s very close to our first figure for an annual run rate estimate of $873 million for total OpenSea revenue, provided that the company’s fixed-to-market percentage costs are implemented as we expect.

Let’s use an annual operating rate of $850 million for the company because it falls between our estimates of the company’s most recent revenue pace, and extrapolate it to full-year earnings. With a valuation of $13.3 billion, OpenSea is only 15.6 times its current operating rate. This is not crazy for today’s market.

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