Sneakers - May 12, 2020

Last updated on August 5, 2020

New Balance 650 x No Vacancy Inn IPO Recap

Jesse Einhorn

Senior Economist at StockX

The New Balance 650 x No Vacancy Inn StockX IPO is in the books. Read how it went down.

The New Balance 650 x No Vacancy Inn StockX IPO is in the books. Read how it went down.

Once again, the StockX IPO — Initial Product Offering™ — has proven itself to be a uniquely efficient method for releasing new products directly to the market. Thus far, we’ve used it to release limited-edition slides with Ben Baller, three new Campus 80s with adidas, and an exclusive Bowman Chrome release in partnership with Topps. For our fourth IPO, which concluded on May 8, we released 400 pairs of the New Balance 650 x No Vacancy Inn featuring a commemorative USB authentication tag. As is now the tradition post-IPO, we’ve put together a comprehensive recap of how it all went down.

The Product

For this IPO, Los Angeles brand No Vacancy Inn joined forces with New Balance for an understated yet striking take on the classic 650 silhouette. This collaboration represents a continuation of No Vacancy Inn’s theme of “Water and WiFi” with New Balance, a metaphor for the two things we all need — Nature and Technology. As previously mentioned, this release also featured a commemorative authentication USB “key” with an exclusive mix of music curated by the No Vacancy Inn crew.

StockX Initial Product Offering™ – How It Works

In a StockX IPO, products are priced using a Blind Dutch Auction. This is the same mechanism used to price certain equities in a traditional stock market IPO. 

A Blind Dutch Auction starts quite simply: everyone Bids whatever amount they want to pay for the product. That’s it. 

Now, all Bids are ‘blind’. This means that you can’t see what anyone else Bids, and no one else can can see what you Bid. The only information each participant has is a description of the product, how many units of that product are available, and how many Bids have already been placed. 

The interesting part comes when we set the price once the IPO is over. Here, all winners are charged the same amount – what’s called the Clearing Price. To determine the Clearing Price, we simply match the top Bids with the quantity available for each sneaker. So, if there were ten items available for a particular size, the top ten Bidders would win. The Clearing Price is then defined as the lowest of those ten winning Bids. 

For example, if the top 10 Bids are $1000, $900, $800, $800, $750, $700, $600, $600, $550, and $500, then the lowest winning Bid is $500. This means that the Clearing Price is $500, and all 10 winning Bidders will only be charged $500. Even the top Bidder, who Bid $1000, will only be charged $500! 

This is why a Blind Dutch Auction is such a great model: everyone pays the Clearing Price, so most Bidders win the product for less than what they were willing to pay.

IPO Results

After four days of action on the StockX marketplace, the New Balance 650 x No Vacancy Inn IPO garnered nearly 14,000 unique Bids, the highest number of Bids in any StockX IPO to date. It was also a truly global release: 30% of Bids originated outside of the United States, and 61 different countries and territories around the world were represented.

Across all sizes, the average clearing price was a whopping $415. For individual sizes, the clearing prices ranged from a low of $325 (for size 7.5) to a high of $500 (for size 12). This was the highest clearing price in StockX IPO history. However, given the unique Blind Dutch Auction pricing method, the vast majority of winning Bidders paid less than they were willing to Bid.

Size Quantity Bids Clearing
Price
% Of Winning
Bids Above
Clearing Price
6 9 472 $400 89%
7 9 436 $401 89%
7.5 15 369 $325 93%
8 35 771 $350 91%
8.5 37 970 $375 95%
9 47 1,486 $450 89%
9.5 45 1,794 $450 89%
10 32 1,656 $455 97%
10.5 46 1,707 $422 98%
11 36 1,365 $450 86%
11.5 49 906 $350 98%
12 19 1,102 $500 74%
13 21 893 $464 95%

To get a clearer sense of how the clearing price is determined, the following graphic shows the Bid distribution for a size 10.5:

Everybody Wins

The IPO model has significant advantages over traditional retail pricing. Consumers have a fair chance to get the product they want at a price they are willing to pay (or often less!); and brands can realize the true market value for their products while minimizing the headaches of trying to bring high-demand products to market fairly. Simply put, everyone wins in a StockX IPO.

In this IPO, 92% of winning Bidders secured the sneakers for less than what they actually Bid! New Balance was able to sell through all of their inventory, at once, without worrying about sites crashing or whether they chose the optimal retail price. And now that the IPO has closed, winners have the option to turn around and resell their sneakers on StockX, and Bidders who didn’t win or those who missed the IPO can still purchase these items at a fair market price. Already, at the time of this writing, there are well over 100 active Bids on the New Balance 650 x No Vacancy Inn product page.

Best of all, our IPO model avoids the many frustrations that come with a traditional retail release. Buyers didn’t have to contend against bots, stand in a line for hours, or enter some arbitrary raffle. All Bidders had an equal shot at winning the product they wanted, and engaged in a process that was fair, efficient, and transparent.

Rest assured, we have a lot more IPOs coming up in the near future. And the more products we IPO, the more we’ll change the game with this revolutionary release method. So stay tuned, because we’re just getting started.