- Coatue Management has significantly reduced the valuation of its investment in OpenSea by 90%, from $120 million to $13 million.
- The markdown of OpenSea reflects a broader trend of declining valuations in the NFT and Web3 sectors.
- OpenSea has faced challenges due to the bear market and decreased NFT trading, leading to a substantial workforce reduction of 50%.
Coatue Management, a prominent tech investment firm based in the United States, has made a significant move by marking down its investment in the nonfungible token (NFT) platform OpenSea. The company has reduced its initial investment of $120 million to a mere $13 million, reflecting a staggering 90% decrease in the value of its stake. This substantial markdown indicates that OpenSea’s on-paper valuation has plummeted to approximately $1.4 billion.
This development comes on the heels of Coatue Management’s decision to also mark down its investment in MoonPay, a Web3 payment provider, by a similarly substantial 90%. These markdowns signal a shifting landscape within the NFT and Web3 sectors.
In January 2022, OpenSea raised an impressive $300 million in a Series C funding round led by crypto venture capital firm Paradigm and Coatue Management. At that time, the NFT platform was riding high, with a valuation of $13.3 billion. However, the recent bear market and a prolonged decline in NFT trading activity have forced OpenSea to take drastic measures.
On November 3, OpenSea announced a workforce reduction of 50% as part of its strategy to relaunch as “OpenSea 2.0.” CEO Devin Fizner stated that this streamlined team would make the platform more agile and responsive. OpenSea’s new version will focus on enhancing its technology, speed, and overall quality.
OpenSea is making some big changes today to focus on the next version of our product.
— Devin Finzer (dfinzer.eth) (@dfinzer) November 3, 2023
It’s worth noting that OpenSea faced criticism earlier in the year when it retired its operator filter, a feature that allowed creators to blocklist non-royalty-enforcing marketplaces, sparking controversy within the NFT community.
Coatue Management’s decision to mark its investment coincides with a broader slump in NFT trading volumes. After reaching its peak in 2021 with over $14 billion in sales, the NFT market has experienced an 80% drop in trading volumes since March 2022. However, a recent report from crypto data firm DappRadar suggests a glimmer of hope, with the NFT market recording its first month of gains in over a year, posting a $99 million increase month-over-month in October.
Coatue Management’s substantial markdown of its investment in OpenSea highlights the challenges and adjustments faced by the NFT sector in a changing market landscape. As OpenSea strives to adapt and revamp its platform, the broader NFT industry continues to navigate the complexities of evolving trends and investor sentiment.