Today's focus is on another special class of domains which I hold dear to my heart - of course, we are talking about 3 letter .com domains. To start, let's analyze the latest public LLL .com sales (from NameBio) to understand the current condition of the market:
1. In 2019, there were 76 sales with a average price of $61.6k with the lowest sale being at $10k.
2. In 2020, there were 43 public sales with average price of $69.5k with the lowest sale being at $10k.
3. 2021 has had already 11 public sales with an average price of $147.9k with the lowest sale being at $26.5k.
With a quick glance at these numbers you can easily realize that quantity of 3Ls being traded is slowly declining while demand is through the roof (hence the pricing rise). Whether you have recognized it or not, the scarcity crunch on 3 letter .com domains is upon us and prices are rising fast.
Still not convinced? To give a better perspective, here's some more data showing 3L .com sales over the last 5 years, the last 3 years, and the last 1 year:
Beyond the numbers, I have been following a series of LLL offerings (to better understand current pricing) with the most recent being a Godaddy auction for iaf.com that sold yesterday for $43k. The reason this mediocre 3L sold for that amount is because you just can't find these types of domains in auction anymore (so for the people not on my newsletter, they think it’s the only chance they have). Auctions usually garner the lowest price because serious domain investors don't want their sales public (as they know it makes it so much harder to sell unless the past price was higher than the current one).
Consider just how far the scarcity crunch could go ... think about Bitcoin and how there are about 18,686,200 in circulation and its price is over $55k+. Now think about real estate and how there are 100s of millions of acres available and the price per acre is around $10k-$10M+. Then you can come to domains and see that there are just 17,576 3 letter .com domains available and the average price is only $100k-$150k? Obviously real estate is more important than domains or bitcoin and bitcoin *arguably* has more usage potential (though less current use) than domains but still it's a fair question to pose considering that 3L .com are far more scarce by a factor of 1000x yet their price is only about a factor of 1x of these. Showing the slow rise in domain value combined with the fundamental growth in the internet over the last couple years, it doesn't seem that 3L .com domains are in a bubble the way many other assets are in the US (or will be in one any time soon). It seems that the 3L prices have a ways to go as there are less and less 3Ls available every day.
The question I pose to you is: Are 3 letter .com fundamentally undervalued and is right now when the market is realizing it? You are free to come to your own conclusion.