I received Giuseppe Graziano’s weekly domain brokerage newsletter this morning, and I was a bit surprised by one of his observations. In going through some recent domain industry developments, Giuseppe opined that “the most impressive development that I have seen is the registration of the remaining 30,000 Chinese Premium LLLL.net.”
Giuseppe later continued with some back of napkin calculations on why he felt this was a shrewd investment:
“Chinese Premium LLLL.com (also called “chips” – credit: Tim Schoon) have a current floor price of approximately $300, but their trading range is more in the $400/$600. If we play by the book and assign a value of 5-10% of the corresponding .com for each .net domain, we notice that, even if using the conservative 5% figure, all these LLLL .net should have a minimum value of ($300 * 5% =) $15 each. If someone registers a premium .net for $8, then they should be instantly able to turn a ($15 – $8) $7 profit per domain. Therefore, whoever invested the supposedly $240,000, should have an instant value capture of approximately ($7 * 30,000 =) $210,000, which is not a bad return for a day (or one hour) of tiring work”
In my opinion, selling 30,000 domain name is a daunting task. The calculations above considers one year of registration for each domain name, and if it takes longer than a year to sell them, the prospective profit could be significantly reduced. There is also a risk that the market changes in the near future and the estimated value gets reduced. Finally, there could be a legal risk if companies believe a 4 letter .net infringes on their trademark(s).
According to Giuseppe, there are still over 150,000 total LLLL.net domain names that are currently unregistered. Giuseppe shared his thoughts on why registering these domain names might not be such a good idea right now:
“There are about 150,000 LLLL.net still left for registration. Would this be a good time to buy them? Well, if we assume an “optimistic” $100 floor price for non premium LLLL.com, at a conservative 5% evaluation, “non-chips” LLLL.net should have a floor around 5$, which is still lower than the registration fee. So probably not the best place to invest right now, although I won’t be surprised if, by the end of 2015, this would become a viable investment.”
I am curious if you think registering 30,000 LLLL.net domain names was a good idea and if you think the investment will pay off. I am not all that familiar with the .net domain name market, nor am I experienced in the Chinese domain name market.
What are your thoughts?