Why the Beanie Baby Bubble Burst

$215K.

That’s how much you could rake in if you have a Batty the Bat Beanie Baby hiding somewhere in your basement.

Beanie Babies swept the nation in a frenzy in the 1990s. But they weren’t an immediate hit on the market.

Creator Ty Warner, founder of toy company Ty Inc., employed a few tactics to make his plushies seem more valuable than their affordable retail price of $5.

Warner created a sense of exclusivity around his Beanie Babies by regularly retiring popular versions and releasing limited editions like the coveted Princess Bear.

His methods worked and fed into a budding secondary market where Beanie Baby prices could reach upwards of thousands of dollars. eBay auctioned off $500 million worth of Beanie Babies in just one month in 1997.

Value Unveiled

As quickly as the Beanie Baby hysteria rose, it fell along with the shroud of the stuffed animals’ scarcity.

Ty Inc. upped production of newer Beanies in 1999 and in turn tarnished their rarity and value. Demand from collectors fell and Beanie Baby sales plummeted.

By manipulating supply to create a greater sense of value, Warner set himself up for failure. As he tried to tap into his own hype, he lifted the smoke and mirrors of Beanie Babies mania.

Warner wasn’t the first or last to try capitalizing on a sense of scarcity. The plight of the plushies has drawn comparisons to the current hype around NFTs (or nonfungible tokens) and the high value being placed on digital items. The inherent scarcity of NFTs has helped skyrocket their initial value, but signs of market cooling are already emerging.