In my opinion, For at least the last several years, domain name auction prices have seemingly become inflated. Domain names I was buying for $100 or less seem to sell for $500+ at expiry auctions these days. Hardly a day goes by when there are good domain names available to buy for the minimum bid. It still happens, as I will share later today, but single bid auctions are much more difficult to find these days.
It’s not just one auction platform that has seen this. Pretty much every platform has seen more domain names sell and for higher prices, including GoDaddy Auctions, NameJet, DropCatch.com, and Park.io. It’s not necessarily a bad thing either, although it has made the process of acquiring good domain names for reasonable wholesale prices more difficult.
I believe there are quite a few factors, some being transient, that have led to this expiry auction price inflation. My hypothesis is that several factors, listed below, have contributed to the higher auction prices we have seen including:
1) There is more money to reinvest in domain names due to:
*** Strong domain name sales aftermarket giving investors more capital to reinvest.
*** Government helicopter money.
2) Fewer good domain names available to purchase in private. People have been buying domain names in private for 20+ years and much of the low hanging fruit and weaker hands have let go of their domain names.
3) Domain names are in stronger, better-funded hands, and the cost to acquire privately has gone up. Consequently, people look for less expensive alternatives in the expiry market.
4) GoDaddy adding its appraisal tool output on domain auction pages and better expiry analysis tools available to more people.
5) Domain investment businesses growing their portfolios much larger than before due to:
*** Take advantage of operating at scale.
*** Potential for a large buyout.
6) More competition from end user buyers who recognize the expiry market is a good place to find domain names.
I am sure there are other factors I overlooked, and I am interested in learning what other investors believe has driven up expiry auction prices. Feel free to share your own hypothesis below in the comment section.
Original article: Hypothesis on Expiry Auction Price Inflation
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