PSA Stock is Booming

[Rich Klein]

Stock in Collectors Universe, the parent company of PSA, soared past $60 on Monday, a new 52-week high. It reached a peak of $64.04 before settling at $62.05 at the end of trading.

As late as mid-June, the stock was below $30. Over the last 52 weeks, it had been as low as $13.26. The company now has a market cap of $573.34 million.

[GasHouseGang]

Good?

[perezfan]

Hmmm... very similar to Enron, before things went south.

[bobbyw8469]

I was this close to buying some at $15 back in June. Now I wish that I had.

[sportscardpete]

Pricing power and a sustainable moat. Hard to come by.

[Casey2296]

Originally Posted by bobbyw8469

I was this close to buying some at $15 back in June. Now I wish that I had.

How to use PSA to your advantage.
Buy 1000 @ $15 in June, sell 1000 @ $60 in Sept. Buy 1 E121 Ruth (throwing) in October.

[GasHouseGang]

Originally Posted by Casey2296

How to use PSA to your advantage.
Buy 1000 @ $15 in June, sell 1000 @ $60 in Sept. Buy 1 E121 Ruth (throwing) in October.

Graded by SGC no doubt!

[jakebeckleyoldeagleeye]

Originally Posted by Casey2296

How to use PSA to your advantage.
Buy 1000 @ $15 in June, sell 1000 @ $60 in Sept. Buy 1 E121 Ruth (throwing) in October.

Don't forget good old Uncle Sam!

[trambo]

Originally Posted by perezfan

Hmmm... very similar to Enron, before things went south.

..although it's highly doubtful that Collector's Universe is working in off balance sheet partnerships to create false profits. So not similar at all except for a jump in stock price.

[Yoda]

I hope, after the price run-up, they are considering selling a bit of treasury stock and hiring a few more experienced graders to deal with their ponderous backlog.

[Throttlesteer]

What's the going rate for 8-month service levels now?

[Exhibitman]

Originally Posted by Yoda

I hope, after the price run-up, they are considering selling a bit of treasury stock and hiring a few more experienced graders to deal with their ponderous backlog.

Why mess with success?

As of right now, PSA has a double-secret back-log

[Fred]

What was that term used back in the late 1990s and early 2000s? Oh yeah, "irrational exuberance". It's a great time to be in the market as long as you were in it long before this run-up.

There's a lot of people that are anxious and wanting to put their money "somewhere".

Kind of weird when you think about this hobby and the term "house of cards".

Do you sell now and pick it up on the cheap after the collapse? Or do you hold on to them?

Ok, hope I didn't freak anybody out...

[Fred]

Originally Posted by Throttlesteer

What's the going rate for 8-month service levels now?

I sure hope that was a joke. If so, it's funny!

[Misunderestimated]

What percentage of Collector's Universe is PSA ?

I thought that the PSA brand/business (cards and especially sports card grading and authentication) was one of the things that comprises CC's businesses. My recollection was that PSA was a "cash cow" for CC over the past 5-10 years *... I don't remember much else.

Also, as with any stock rising over the past several years, another germane question may be how much is being bought back by the company?

There are some real finance-types who frequent this board who could tell us just how much of this rise in CC's price can be attributed to PSA's recent success during the past several (COVID-19) months. My best guess is that there is some relationship but again its not my area of expertise .....
---------
* I think PSA's profitability was one of the reasons that its leader Joe Orlando was promoted to leadership of all of CC .... You can agree or disagree with how he ran/runs the company as a collector/card investor but my understanding has been that it was a success by the common measurements applied to American CEOs over the past 30+ yrs..... Again someone with an expertise in business/finance could speak to this with greater aptitude than me....

[sportscardpete]

PSA is ~43% of revenue.

[WhenItWasAHobby]

Having recently watched The Inventor: Out for Blood in Silicon Valley (the story of Theranos - the failed high tech blood testing company), I observed a lot of similarities between Theranos and PSA pertaining to their aggressive means of concealing each of the company's glaring problems from the public. I suppose the big difference is that having a blood testing system that doesn't do what it purports is a lot different than a card grading system that doesn't do what it purports and the consequences that follow.

[Tao_Moko]

I can't imagine adding a hobby support company into my portfolio. Too much concern over pandemic purchasing trends to see this as less than volatile.

[Yoda]

Originally Posted by sportscardpete

PSA is ~43% of revenue.

Yes, but what percentage of CU's gross profit is attributable to PSA. I suspect it is higher than 43%.

[TobaccoKing4]

I bought in at approximately $19 right before it started to take off expecting it to run back up to the upper 20s and sold out at $25 a couple weeks later. Wish I held.

[sportscardpete]

Originally Posted by Yoda

Yes, but what percentage of CU's gross profit is attributable to PSA. I suspect it is higher than 43%.

Why would you suspect that?

The company has terrible below revenue transparency that doesn't break-out gross profit per business line.

[Lobo Aullando]

Originally Posted by Yoda

Yes, but what percentage of CU's gross profit is attributable to PSA. I suspect it is higher than 43%.

From their latest 10K filing on page 31:

"The gross profit margins we earn on collectibles authentication and grading submissions are impacted by many of the same factors that impact our revenues, as the average service fee and the resulting gross profit margin earned is affected by (i) the volume and mix of those submissions among coins, trading cards and other collectibles, because we generally realize higher margins on coin submissions than on submissions of other collectibles... In addition, because a significant proportion of our costs of sales are relatively fixed, our gross profit margin is also affected as we build authentication and grading capacity in response to the record cards and autographs backlog (as there is a delay between incurring the cost of additional capacity and the resulting full revenue benefits) and by the overall volume of collectibles that we authenticate and grade in any period."

Back up on page 2, it has average fees at $18.82 for coins and $10.27 per card. That just tells you how much of their business is bulk submissions.

So, maybe it's still lower than that 43% mark now, but tbd for the future, depending on market fluctuations. Either way, the margins they have make it look like they'll still be turning a long-term profit.

https://www.sec.gov/edgar/searchedga...anysearch.html

[sportscardpete]

Good find!

Originally Posted by Lobo Aullando

From their latest 10K filing on page 31:

"The gross profit margins we earn on collectibles authentication and grading submissions are impacted by many of the same factors that impact our revenues, as the average service fee and the resulting gross profit margin earned is affected by (i) the volume and mix of those submissions among coins, trading cards and other collectibles, because we generally realize higher margins on coin submissions than on submissions of other collectibles... In addition, because a significant proportion of our costs of sales are relatively fixed, our gross profit margin is also affected as we build authentication and grading capacity in response to the record cards and autographs backlog (as there is a delay between incurring the cost of additional capacity and the resulting full revenue benefits) and by the overall volume of collectibles that we authenticate and grade in any period."

Back up on page 2, it has average fees at $18.82 for coins and $10.27 per card. That just tells you how much of their business is bulk submissions.

So, maybe it's still lower than that 43% mark now, but tbd for the future, depending on market fluctuations. Either way, the margins they have make it look like they'll still be turning a long-term profit.

https://www.sec.gov/edgar/searchedga...anysearch.html

[wondo]

"Well is about time PSA Stock is swooning. Their turn around times are horrible. The scandal still fresh. I would expect the stock to be swooning!" - Ms. Emily Litella.

[Yoda]

Originally Posted by sportscardpete

Why would you suspect that?

The company has terrible below revenue transparency that doesn't break-out gross profit per business line.

Pete, simply to determine if CU's gross profit was more or less in line percentage-wise with PSA's contribution to gross revenues. I think Lobo's post answered my query as best as possible, given CU's lack of transparency with lines of business contribution, respectively.