What Justifies The $110.5 Million Price Tag For This Painting?

An untitled Jean-Michel Basquiat painting sold for $110.5 million. (Photo courtesy of Masterworks)

The moment shutters and flashlights kicked painters out of the portrait-making business, art had to reinvent itself. It became more about the depth, journey and story behind each piece, rather than about the beauty alone. An untitled Jean-Michel Basquiat painting was sold for $110.5 million, and its new owner knew exactly what they were doing when raising their bid paddle.

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The world’s most affluent art collectors don’t purchase million-dollar pieces solely for their aesthetic enjoyment. The practicality of tax breaks for donated works and fine art’s tendency to appreciate in value over time are persuasive motivators. While you’re probably familiar with older masters of the brush, such as Leonardo da Vinci or Pablo Picasso, whose works go under the hammer for hundreds of millions of dollars, you’ve probably never heard of contemporary artists that will likely do the same in the future.

Artists like these are few and far between, making their works scarce. Combine that with the fact that they enjoy a great following in the ranks of the world’s elite and the picture becomes clearer. Post-war and contemporary art significantly outperformed the S&P 500, bonds, gold, real estate, hedge funds and other assets between 1995 and 2022.

Masterworks, a platform that lets you buy shares of these pieces, owns a fine art database with more than 50 million data points on over 60,000 artists drawn from auctions dating to the 1970s. Its art market experts use the one-of-a-kind database to aid their decision-making before they acquire a piece and securitize it with the Securities and Exchange Commission, allowing investors to buy their shares. Once the painting is sold, investors get their money back along with the profit from the sale.

So far, Masterworks has executed 16 of these sales — all with positive returns. And investors in these deals have landed profits of over $10 million (net of fees.)

Masterworks’ policy dictates that only serious investors get the chance to add shares of its offerings to their portfolios. The company dedicates time to every interested person, which creates a waitlist. But you can skip the waitlist by clicking here.