OpenSea's Market Value Plummets, Halts OTC Transactions
In Brief
OpenSea, a prominent platform for NFTs, has witnessed a staggering drop in its secondary market valuation, which has plummeted from a remarkable $12 billion down to only $1.2 billion.
OpenSea , once a soaring star in the NFT the marketplace has hit major roadblocks, with its secondary valuation diving from an astonishing $12 billion to a mere $1.2 billion.
In light of recent developments, the company has decided to put a hold on over-the-counter ( OTC ) equity transactions as it seeks additional rounds of funding.
A Blocked OpenSea Sale
Dovey Wan , a prominent figure from Primitive Ventures , has revealed an important shift in OpenSea's strategy. The company has barred an investor from purchasing equity at a staggering 90% discount compared to its last investment phase.
This decision seems to be an attempt to keep the diminished valuation under wraps to protect ongoing fundraising activities.
Wan pointed out the drawbacks of restricted liquidity in a recent tweet where she shared insights on the scenario. She stated, \"Equity has its downsides compared to NFTs... restricted liquidity is particularly troubling,\" in her tweet.
I was presented with a secondary opportunity from a major crypto unicorn last year at a valuation of $12 billion, and now I have received another offer below $1.2 billion, with the company blocking these sales to prevent a reflection of a 90% discount on paper 😹
— Dovey \"Rug the fiat\" Wan (@DoveyWan) September 19, 2023
Equity has its downsides compared to NFTs... restricted liquidity is particularly troubling
OpenSea’s recent decisions highlight its urgent attempts to preserve its market reputation while on the hunt for fresh investment. By obstructing equity sales at such a steep discount, particularly at 90%, the company may inadvertently cultivate a false sense of assurance among current and prospective investors.
Nevertheless, this approach might come back to haunt them, casting doubt on their transparency and deterring investors from engaging in future funding rounds.
Reputation Damage or a Smart Move?
While it's premature to draw any firm conclusions, OpenSea's strategy to inhibit OTC trades and obscure its drastic valuation fall could yield significant repercussions for its public image and fundraising efforts down the road. Should the company navigate this turbulent phase successfully and secure substantial investments, they may be able to reverse their fortunes.
Conversely, if they struggle to convince investors of their value, especially amid such bold strategies to manage the narrative, the fallout could further tarnish their reputation.
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