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?
So, the investor dropped $240,000 for 30,000 .net’s. Bad idea IMHO. I would have invested the same money in 1-2 one word domains and sold them for $500K each. Less inventory to worry about. Simple math here. I am all about quality vs. quantity. The chinese market could collapse any time.
Thanks Elliot. Just wanted to add something from the newsletter. A big part of turning this specific registration into a profitable deal is to minimize renewal fees, which can be done if you work with/as a registrar.
Thank You Mr:Giuseppe Graziano, you just made my 4L dot com portfolio gone up in value.
Yes, I hope it will take off and it is a win win situation.
Anytime someone regs the dot whatever and you have the dot com, you should give them a “pat” on their butt for saying..good job.
I was real close to doing this myself. I like the gamble.
I really enjoy reading Giuseppe’s newsletters. Always adding his valuable point of view to take into account. Regarding the LLLL.net movement, it’s good for all .com lovers 🙂
30,000 * (discounted reg fee) will probably be, order of magnitude, $100-200k+/yr. just on renewal fees. That is a massive upkeep cost, which really impacts the viability of “prospecting” across such a large portfolio.
Why wouldn’t a motivated buyer for a LLLL.net simply go with the .COM? How many motivated firms are there in this goldilocks zone where they’ll pay a for the .NET, but NOT just bite the premium for the .COM?
It’s an interesting investment. Even if you calculate 3 more years of renewals to put the grand cost at a cool $1,000,000.
The downside would be losing $1,000,000.
In 4 years let’s make some assumptions:
The floor price for Chinese premium .net at that time around $33 and the investor is able to sell all. Break even.
Seller sells all at $50 average. Profit $500,000.
Seller sells all at $100 average. Profit $2,000,000.
A key question is who is the investor? That will give us more information to whether it was a good buy or not.
The Chinese domain market is like a virus, infecting the minds of many otherwise sensible investors.
All this ‘coinage’ reference to domains, that are supposedly ‘liquid’ is a representation of the Chinese stock market’s volatility. Many trillions have been lost, read some news at Bloomberg.
I am also sick and tired of receiving Chinese spam for domains, simply because they treat domains as chips to be traded. Every single LLLL/NNNN permutation is being emailed at by those buffoons.
and you sound like a buffoon
Acro, you hate Chinese investors because you have nothing to sell them and because you are not doing well with your portfolio. Grow up, crying boy! Life is an evolution and you better adapt before your business collapses.
I’m doing just fine, in fact every damn Chinese spammer wants my LLLL .coms for 1600 yuan a pop. That’s exactly what I’m saying here.
Incidentally, please post a couple of domains you own or do trolls own anything of value these days?
No risk no reward.
Would have been a smart thing to do with NNNNN.com and bad letter LLLL.com a few years ago when they were cheap.
It could be a bust or it could work out with LLLL.net, but after all these years I’ve never really seen .net gain any ground in the aftermarket.
If I had $240,000 to put into domains it would be into much fewer, premium .com’s.
I’d be surprised if the buyer paid $8 per registration. shocked, actually. I would not be surprised at a $1 .com/.net firesale price (or even less). The massive quantity purchase will at least make the .net zone file artificially look like its shrinking at a slower rate. Depending on the rate of .net shrinkage next year, the buyer could probably negotiate a cheap renewal price then, too.
Recently I have been seeing 4L.net domains being snatched up when they drop.
I’m guessing that the mindset behind this is ‘securing’ the namespace. So although people are quantifying these domains at $8 -$10 each (depending who you talk to), I think that if an investor who just spent $800+ on the .COM might want to secure the .net for $20 – $50 dollars.
I own a 4L with a high monthly search value that I really like, and I picked up the .net that was registered since 2008 for $20 – in order to increase the value of the .COM and further secure the namespace.
So if I’m thinking like that, I’m sure that whoever registered the .net’s can blow out the inventory pretty quickly (with automation) by selling to the .COM owners for $20+.
I own BACY.NET. Anyone interested?
HELLO I OWN PPPP.CH LOOKING BEST OFFER
If he held them till now and they are chips I bet he’s happy