Are expensive sneakers really an investment?

I have been hearing more and more about trading / auction websites that provide a secondary market in high-end sneakers. Sneaker enthusiasts try to buy anticipated shoe models at retail and then re-sell them for high prices when the shoes have sold out. Sure, this sounds odd but the market for high-end sneakers is now serious business. But are sneakers really a ‘new asset class,’ as some market commentators suggest?

Perhaps the best-know reseller,, calls itself the stock market for things.

There are, of course, plenty of other ways that people can engage in competitive buying and selling of collectibles–with eBay being the original mass-market real-time auction site. The founder of StockX started out by collecting and tracking data on sneaker prices on eBay. The new breed of reseller sites such as StockX are enjoying rapid growth. In a recent round of financing, StockX was valued at $1 Billion. Without the bid-ask structure run by StockX, there are many reseller sites that post collectible shoes for sale. For a list of well-known reseller sites, see this article.

If you look at StockX, you see charts showing the rise and fall of prices on different styles of shoes through time. The price history of the Nike Jordan 1 Retro high-top (below) shows that this show was selling for $400 a pair in April and May of 2019, but the price started to drop in late May and is now selling for around $235 a pair. The retail price for this shoe was $160.


People who are into sneakers are actively buying and selling in hope of turning a significant profit. What does the emergence of this new and growing market tell us?

While the crazy markets for sneakers is fairly new, there have been plenty of previous collectible crazes. Let us not forget that the most desirable beanie babies sold for as much as $13,000 back in the late 1990’s and, of course, the enthusiasts promoted these collectibles as a great investment. To be fair, the rarest beanie babies still sell for thousands–with a recent maximum of $42,000. The vast majority of beanie babies–including so-called limited editions are now worth very little.

Today, we may look back and think its just plain stupid that people spent thousands of dollars on a little stuffed toy–but people are currently willing to pay tens of thousands of dollars for a pair of sneakers.

Both beanie babies and sneakers are examples of what are called manufactured collectibles–items that are specifically produced in limited runs for collectors. The future value of these items is constrained by the fact that there is no end of variations of special editions and limited productions that can be thought up.

Manufactured collectibles are, in general, an unattractive thing to invest in because of the intrinsic lack of real scarcity and the lack of any fundamental underlying value. Precious metals are both limited by natural supply. The value of stocks is ultimately determined by the potential future earnings of the underlying company. Bonds pay interest. Truly rare collectibles have no fundamental value but may appreciate because they are so limited. An original unused pair of Nike running shoes is anticipated to fetch as much as $160,000 at auction but it is apparently one-of-a-kind and has historical and cultural significance.

While people may enjoy their collections of sneakers and the game of watching prices go up and down, very few people will actually make money and most will, at best, break even. Unless someone can make a meaningful argument that speculation in sneakers is different from speculation in beanie babies, best make sure you’d be okay if you end up wearing those limited-run Nikes.