Lego®, globally recognized for its creativity and impact in the toy industry, remains a privately-owned company, making direct stock investment in the company not feasible.
This may seem surprising given Lego's extensive market presence and financial success. However, the Lego investment space offers unique opportunities. Many of its collectible sets, especially those that are retired, have shown the potential for significant appreciation, offering an investment opportunity comparable to traditional stocks.
In this article, we will not only explore how to invest in these Lego sets, but also present practical alternatives for those who wish to incorporate Lego into their investment strategies.
By the end of this article, you'll have a clearer understanding of how to navigate the world of Lego investing, whether through direct set purchases or alternative investment opportunities in the broader toy industry.
Lego®: History and Evolution
The Lego® story begins in the 1930s with carpenter Ole Kirk Christiansen, who started out making wooden furniture. Faced with financial challenges, he turned to making toys from surplus wood. This decision led to the birth of Lego, derived from the Danish phrase "leg godt", which means "play well".
The company started with just six employees. The transition to plastic in the late 1950s was a turning point, with Ole Kirk's son designing the iconic interlocking plastic bricks. This innovation led to the international expansion of Lego factories and a significant diversification of designs.
Why might an investment be interesting?
Investing in Lego® is exciting because of the brand's enduring popularity and ability to adapt and evolve. From its humble beginnings as a wooden toy to today's iconic plastic bricks, Lego has demonstrated resilience and innovation. This adaptability makes Lego a compelling subject for investment consideration, especially given its continued popularity and expansion into different markets and demographics.
Revenue/profit
Lego® has shown remarkable financial growth, particularly highlighted in their recent fiscal reports. The Lego Annual Report 2022 reveals that revenue increased by 17% to DKK 64.6 billion in 2022, up from DKK 55.3 billion in 2021.
This growth, achieved in the midst of challenging economic and market conditions, demonstrates Lego's strong market position and adaptability. The report underscores Lego's enduring appeal and effective response to market dynamics, establishing it as a potentially lucrative investment area in the ever-evolving toy industry.
Technology and Innovation
Lego® has undergone numerous significant changes over the past decades. The most important developments include the following.
Transition to ABS plastic (1963)
Lego® improved the quality of its bricks by switching from cellulose acetate to acrylonitrile butadiene styrene (ABS plastic), a change that provided greater durability and less discoloration.
Advanced Set Design
Move from simple blocks to more complex designs, with sets that include sophisticated elements and interactive features.
The introduction of themed sets such as Lego® Star Wars (1999), Marvel Super Heroes (2012) and DC Universe Super Heroes (2012) marked a significant evolution for Lego, enriching its portfolio with complex designs and interactive features. A wide variety of Lego sets based on movies offer fans the opportunity to recreate their favorite cinematic moments.
Introduction of Lego® Technic
The Lego® Technic theme represents a leap in the company's commitment to innovation, allowing builders to explore engineering concepts through play. By incorporating gears, pneumatics, motors and advanced building techniques, Lego Technic sets challenge and inspire fans to build complex models that mimic real-world machines and vehicles, developing both creativity and engineering skills.
Expansion into Theme Parks
The expansion of Lego® into theme parks began with the opening of the first Legoland park in Billund, Denmark, in 1968, which was a huge success and led to significant expansion over the years. This initial success led to the opening of additional Legoland parks around the world, including locations in Denmark, the United Kingdom, Germany, Japan, Malaysia, Dubai and the United States.
Lego® Stock: Availability and Alternatives
As highlighted in the introduction, investing directly in Lego stock is not an option since it remains a privately held company. This status dates back to its founding in 1932, with the Kirk Kristiansen family maintaining ownership. In the following, we will look at a potential IPO of the company.
Lego® as a Privately Held Company
Lego®, owned by KIRKBI A/S and the LEGO Foundation, remains privately owned, preserving its heritage while staying away from public markets. This model has served Lego well, allowing it to remain innovative and profitable without the pressure of public shareholders. Despite its significant market success and a valuation that suggests it is worth nearly $40 billion, Lego has chosen not to go public, instead focusing on its core mission of "learning through play" and expanding its product lines and theme parks.
Ownership and IPO Possibilities
While there is speculation about an IPO, Lego®'s current stability and growth, underpinned by lucrative partnerships and expansions, suggests no immediate need for public investment. This steadfast approach has allowed Lego to maintain control over its direction and values, ensuring that any future decision to go public will only be made if it is in line with the company's long-term goals and the interests of the Kirk Kristiansen family and the LEGO Foundation.
For investors attracted to Lego's success but unable to invest directly in the company, alternatives include collecting valuable Lego sets or investing in related stocks such as Hasbro and Mattel. These alternatives provide a link to the broader toy and entertainment market, where similar dynamics of innovation and brand strength play an essential role.
Alternative options for investing in Lego®
As already mentioned, it is not possible to invest directly in a Lego® stock. However, there is a lucrative alternative: investing in Lego sets. In the following, we take a closer look at this topic and explain what you should bear in mind when investing in Lego.
Investing in Lego® Sets
Investing in Lego® sets means selecting pieces that historically increase in value over time. Key factors to consider include:
- Rarity
- Exclusivity
- Themes
- Minifigures
- Nostalgia
Licensed themes, such as Star Wars, Marvel and Harry Potter, and original Lego themes, such as Ideas and Architecture, are particularly valuable. The Lego Creator Expert Modular Buildings series is notable for its detail and potential to create a miniature city, making it a favorite among investors for its steady appreciation after being taken off the market.
Average Return
The average return on investment for Lego® sets can be quite attractive, with a study conducted by economists at HSE University showing that secondary market prices for retired Lego sets increase by approximately 11% annually. This rate of return outperforms traditional investments such as gold, stocks and bonds, making Lego a compelling alternative investment option. The study highlights the unique appeal of collectible toys, including Lego sets, as a lucrative investment opportunity.
These Sets Increase in Value
Certain Lego® sets have shown remarkable increases in value, making them highly desirable on the secondary market. For example, early sets in the Modular Buildings series, such as Cafe Corner, have increased in value from their original retail price to several thousand dollars on the resale market.
Value Increase Cafe Corner
The Ultimate Collector's Series (UCS) of Star Wars is another example, with sets designed for adult fans featuring significant increases in bricks, detail, and price, appreciating well beyond their original retail price over time.
Three sets for your Lego® investment portfolio
Would you like to invest in Lego® sets? In the following section, we present interesting sets that are suitable for investment and represent a lucrative investment in Lego stock. Our selection only includes sets that are expected to retire in 2024.
1.Lego® Star Wars 75257 Millennium Falcon
The Lego® Star Wars 75257 Millennium Falcon was released in October 2019 and is expected to retire at the end of the year. The set has an RRP (recommended retail price) of $169.99, but it can be bought for less than $120 on offer. The part out value is just over $195, which is not really good in relation to the offer price. However, the set has good potential to increase in value in other ways, including seven minifigures, two of which are exclusive to the set.
The minifigures already have a total value of $45, which is already just under 30% of the RRP. The set will also be of interest to a large target group in the future, consisting of both young and older Star Wars fans.
2. Lego® Creator Expert 10274 Ghostbusters ECTO-1
Another interesting Lego® investment is the Lego Creator Expert 10274 Ghostbusters ECTO-1, which was released in November 2020 and according to current information will retire at the end of the year.
The ECTO-1 has an RRP of $239.99 and is on offer for under $160. The set has a part out value of almost $260.
Furthermore, the ECTO-1 is a central element of the Ghostbusters films and appeals not only to fans and collectors, but also to people who grew up in the 1980s and have a nostalgic connection to the films. Its involvement in iconic scenes reinforces the emotional value associated with collecting such sets.
3. Lego® Star Wars 75290 Mos Eisley Cantina
The Lego® Star Wars 75290 Mos Eisley Cantina was released as UCS (Ultimate Collector Series) in October 2020 and is expected to retire in 2024.
As a special feature, the set contains 19 expensive Lego Star Wars minifigures, which already have a very good value of over $210. The set has an RRP of $399.99 and can occasionally be bought on sale for under $320. The part-out value is just under $520, which is an acceptable value in relation to the offer price.
It features exceptional detail and authenticity, bringing to life the iconic meeting point from "Star Wars: Episode IV - A New Hope". This, along with the strong nostalgia factor, makes it a potentially interesting investment for collectors.
You can find more interesting sets in our article on the best Lego investments for 2024 under $200.
Lego® Stock Alternatives
While there is no direct way to invest in Lego® stock, investors looking for opportunities in the toy industry can consider companies like Disney, Mattel, and Hasbro, which have significant presences in the toy and entertainment sectors. We will briefly discuss the relevant companies below.
Disney
Disney's influence extends to digital platforms and international markets, making it a major force in both traditional and new media landscapes. This diversification allows Disney to reach a broad audience and reinforces its status as a leading name in the entertainment and toy industries.
Mattel
Founded in 1945 and headquartered in El Segundo, California, Mattel has grown to become the world's second largest toy company, trailing only The Lego Group in terms of revenue. With an extensive portfolio that includes the world's top toy property, Barbie, and the world's top-selling toy for 2020 and 2021, Hot Wheels, the company has a significant impact on the global toy market.
Hasbro
Founded in 1923, Hasbro, Inc. is an American multinational conglomerate with a diverse portfolio of toys, board games, and digital gaming products. It owns popular brands such as Transformers, G.I. Joe, Nerf, Monopoly, and My Little Pony. Headquartered in Pawtucket, Rhode Island, the company operates globally and markets its products under several well-known brand names.
Amazon
Amazon, a major retailer, offers a wide selection of toys and games from numerous brands, including Lego, making it a major retail player in the toy industry.
These companies offer diverse investment opportunities in toys and entertainment, if not directly in Lego®.
Conclusion: Lego® Stock Investment
Exploring Lego® as an investment opportunity presents a fascinating intersection of collectibility, market dynamics, and brand heritage. Despite the lack of a direct equity investment opportunity due to Lego's private ownership, the investment landscape within the Lego ecosystem - through collectible sets and themed lines - offers compelling opportunities for appreciation and portfolio diversification.
The strategic collection of rare sets, particularly those that are nearing retirement or have significant nostalgia value, aligns with broader investment strategies that value rarity and demand. For interesting sets, see our article on the top five Lego investments under $100 in 2024. In addition, alternatives such as investing in companies with ties to the toy and entertainment sectors offer indirect ways to capitalize on the enduring appeal and far-reaching reach of the Lego brand.
Lego® Stock: FAQ
In the following, we will answer the most important questions about Lego® stocks. We will also show you what other options there are for investing in Lego. In our article on the best Lego investment sets under $50 you will find plenty of inspiration.
Can I invest directly in Lego® stock?
No, Lego® remains a privately owned company, making direct stock investment not feasible.
Are Lego® sets a good investment?
Yes, many Lego® sets, especially retired ones, have shown significant appreciation in value.
What alternatives exist for investing in Lego®?
Investing in collectible Lego® sets or related stocks like Disney, Mattel, and Hasbro are practical alternatives.
What should be considered when investing in Lego® sets?
Consider rarity, exclusivity, themes, minifigures, and nostalgia when selecting Lego® sets for investment.
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