PSA Likely to be Sold...Then Out of Business?

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Posted By: Doug

They can always get a government bailout if things get to bad...

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Posted By: Jamie

I am not running out to buy the stock, and certainly Collector's Universe's negative cash flow is concerning.

However, the burn rate from normal operations I believe is far lower than what is stated. I don't have an actual number, but I am guessing they are really burning about two million a year once you subtract the amount that the jewelry operation cost (and mind you, as the jewelry operation grows, it may even become profitable). But it seems to me like, if they are conservative, they could have as much as ten years of cash left.

It is important to remember that as a company, CLCT is not static, and can take measures to reduce costs and eliminate workforce as a response to a lower amount of submissions. And a lower amount is likely, seeing that card prices continue to drop.

If CLCT ever did decide to sell PSA to a private equity firm, I believe that it would be in the firm's, as well as PSA's, best interests to keep the integrity of the grading process intact. I really do not envision a scenario where PSA lowers the quality of its grades. It would trivialize all existing cards, and PSA would completely self-sabotage their own business.

So I think PSA will be in business for a long time to come, and this is not a good time to panic. As far as forgeries, it is true that they are becoming better all the time, and I don't know what to say about that. But that would affect all grading companies equally.

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Posted By: Jerry Hrechka

Some nuggets of information can be obtained from the PSA Pop report. Read my thread titled "SCARCITY RESEARCH" on the Non Sports forum to see what insights that I've obtained in sets I collect.

That alone makes it worthwhile.

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Posted By: Steve

The sky is falling.


Steve

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Posted By: Matt

Personally, I think that PSA is going to find itself in trouble down the road for some very basic reasons.

To start with, if they're not cash flow positive now with the prices they charge, how are they going to become so in the future?

Secondly, people are already starting to lose confidence in them both because of their inconsistent grading and the fact that they are very secretive about who their graders are and what their qualifications and training are.

Thirdly, their customer service is on the poor side. They no longer guarantee turnaround times, and getting problems resolved is a painful process.

Lastly, they provide a service which is both very discretionary and which does not really add value (by that I mean that a card looks no better in a slab than it does raw).

Add all of those up, and you have a recipe for a struglling company.

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Posted By: Steve F

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Posted By: davidcycleback

I don't doubt that there are legitimate and solid uses of the registry, but I always thought if there is such a thing as a financial bubble, it's the set registry. A collector wanting to post to fellow collectors his Babe Ruth collection I understand, paying big bucks for 1981 Fleer commons for your registry set is idiocy from get go. Most of the insane PSA prices you would see were from people working on a registry set. I assume these collectors had money to burn. I long thought that the 'added value' of the registry was a fashion if not a mirage. Any real added value was to PSA, as it got collectors to submit more cards for grading, including card they'd otherwise never get graded.