This post today is one to congratulate Football Index for their strategy with the IPO’s.
For those new to Football Index, there wasn’t always 1000+ players, but there were just 200 tradeable. Obviously, this is when F.I were in the start up stages, with very few traders it wouldn’t make sense for them to have thousands of ‘markets’ available.
2 Footballers used to join the market every friday, for a measly 25p. Whether it was Neymar, or Benteke! This meant that for some lucky players, they could get a top player, for a really low price! I have no doubts that there were many traders who exploited this, buying at 25p and selling at the premium price. In fact, I tried it myself but wasn’t quick enough!
As you can imagine, the above brought about a huge frenzy in trading. Now, players are released to the market at set times. More importantly, they have set prices, some do come at a premium, depending what their abilities are. I will explain below why this is great for the platform.
Benefits of Scheduled IPO's
There are many benefits to setting schedules IPO’s, as I will detail below.
- Previously, the 25p Promotions would be seen as an easy way to make at least £50 per promotion, providing you could get on the players at low prices. This stopped the platform from growing to the leve that it is today, as many traders would want ‘in’ on the promotion attempts, so they wouldn’t tie their money up in the index due to this.
- Trader confidence. As the ‘squad players’ were making their way onto the platform, traders soon noticed that this change has only strengthened the Index, we have recently seen Neymar fly from £4-£9 in the matter of months.
- A New Market. With Sportsbook betting, there are plenty of people who like to bet on the Underdog, due to the immense profit potential. Recently, Wigan beat Man City and the odds were 25/1. The addition of squad players allows customers like this to join, put their money on an ‘underdog’ (In Football Index Terms this would be a youth prospect), with the hopes of a big payout if the player was to fulfil his potential.
- F.I Ambitions. As Football Index set the initial prices for the IPOs, this is an highlight of their ambitions for the platform. They have recently added James Milner to the platform, which actually was it’s own joke on the Football Index Twitter community. Looking past the price, it let’s us know what THEY think the market is worth, I think adding Milner at £2.30 is a stroke of genius. I will explain in detail below.
- Market Separation. Previously, the Top 200 players competed for the same thing. Now, only the Top 200 can win media buzz. This will help traders who focus on Media Buzz to maximise their efficiency. All Players can win performance buzz however.
- Top Players will rise. Adding all of the squad players will highlight just how good the top players are, meaning price rises. Much like we have already seen with Neymar, Harry Kane, Lionel Messi, Cristiano Ronaldo and so on. These players have already risen in price, but I don’t think they’re anywhere near finished yet.
- Great Return on Investment. There are players on the Index now ranging from just £0.20. Keep in mind that the maximum a player can earn in one day is £0.23, this means there is huge potential on the index. Note, I am not saying that the 20p player will return this figure, as players prices are determined by traders, and the players who are expected to win dividends every week come at a premium price.
Case Study: Is James Milner worth £2.30?
If you had money in your account and would like some advice on which players to buy, I don’t think Milner would be on any traders wishlist.
Don’t get me wrong, he’s not a bad player, he scores a decent amount of points for Performance Buzz, but at £2.30 a share, there are far better options.
However, the introduction of players such as James Milner will add new levels of confidence to the markets. Football Index wouldn’t introduce a player for nobody to buy him.
They believe that this is his value on the index. It may not be value currently, but they believe their platform growth will attribute to James Milner being worth £2.30.
I stand with them on this! Since James Milner has been introduced to the market, it seems to have increased the average prices of the top performing defenders. Otamedi, Stones & Koulibaly have seen their prices increase and Otamendi has overtaken Milner as the top priced defender. What we have seen is that when one player has a price rise, the rest of the index will then rise to ‘catch up’. For example, Neymar flew up to £10.50, I noted Griezmann at £3.80 and Paulo Dybala at £4.51. As soon as Neymar got his rise, traders then look at other players, using Neymar as the baseline.
Is Neymar 3x the player that Griezmann is? Is Neymar 2x the player which Dybala is? As this is what the Trading price suggests!
High priced players can work wonders for others on the Index. This just shows that you don’t need to be on the Top Players, to benefit from their price increases.
Griezmann now trades at £4.40, Dybala £4.94.
But no, James Milner is still not worth £2.30 currently.
Another great thing about Milner being £2.30 is that he takes up a place in the Top 200, meaning he is eligible for Media Buzz.
Personally, I don’t see him winning Media Buzz anytime soon, so this adds more value to players in the Top 200, as it’s less competition.
Disadvantages of the IPOs
IPOs can still be very hard to find on Football Index. Yes, we get given the player, aswell as a rough time which they will enter the index, but it’s still not easy to find your much wanted player.
The IPOs also add competition to the Index. I didn’t trade much when there was just a Top 200, so it doesn’t affect me much. However, I can see this being frustrating to those which have had to adapt from The Top 200 only. However, if they still trade now on Football Index, their transition will be made much smoother by the fact they will be holding players such as Neymar & Messi for as little as £0.25!
The way Football Index handled the IPOs is nothing short of fantastic. They implemented this in a way to protect traders portfolios, if they had introduced all of the players or £0.25, it would have seen most players fall in value, due to traders exiting trades to try and profit from flipping IPOs.
Traders would have no reason to sell shares in Neymar to purchase players such as James Milner, as it just doesn’t make sense to them.
There is plenty more growth in this platform, with the World Cup coming soon, aswell as Football Index having a huge advertising push.
Great times ahead for Football Index & the loyal traders!