Streetwear authority Hypebeast is making a big bet on the booming sneaker resale market.
The Hong Kong-founded digital media company has been a top source of intel for people selling and buying designer sneakers for 15 years. Now, it’s going public in part to fund its own sneaker resale platform, a move that would pit it against marketplaces like StockX and Goat.
The company said Monday (Apr. 4) it plans to list on the NASDAQ through a SPAC deal that’s expected to raise $180 million; it will trade under the $HYPE ticker.
Hypebeast is attempting to cash in on what investment firm Cowen called “a booming alternative asset class”. Cowen estimated the global sneaker resale market to be worth about $6 billion in 2019, predicting it would rise to nearly $30 billion by 2030.
There’s been an overall uptick in interest around sneakers. In January, Bloomberg reported that StockX, a leading sneaker resale platform, was gearing up for an IPO in the first half of this year after being valued at $3.8 billion last year. Last November, eBay bought shoe authentication service Sneaker Con to help with the growing transactions it was seeing.
Hypebeast, which listed in Hong Kong in 2016, recorded over $112 million in revenue last fiscal year, but most of it came from its editorial and creative agency. Less than 30% came from retail through its ecommerce site HBX, which sells branded designer apparel and shoes. Until now, Hypebeast has had no real stake in the lucrative resale market, where a pair of shoes that retails for $180 can be flipped for thousands of dollars.
“This is a monster opportunity that has barely been touched,” founder and CEO Kevin Ma said during the listing announcement. “The funny thing is that all the e-commerce sites actually advertise with us already because they really want to reach our audience. But now we’re going to try to do it better than anyone else.”
While nearly every media company, from the New York Times to Condé Nast to Hearst, has begun merging content with commerce, the opaque nature of resale makes curation that much more crucial.
Because the price of a pair of shoes can fluctuate wildly on the resale market—buyers are allowed to negotiate with sellers—the level of knowledge to determine a fair sale price is much higher than when buying directly from a brand.
StockX and other shoe resale platforms have also expanded their content, for instance, by creating buyer guides to popular shoe styles. However, when it comes to curation, Hypebeast has the upper hand since they were a pioneer in the space.
Hypebeast has gathered a number of famous investors including sports stars Tom Brady, Tony Hawk, Naomi Osaka, Airbnb founder Joe Gebbia, and actor Jonah Hill, among others.
The company is in a better position than existing players to scale the second-hand shoe market globally. It already has a foothold in international markets through its media site, which also publishes in Chinese, Korean, Japanese, and Indonesian.