Galaxy Digital Shines As Star While FTX Collapse Spoils Industry Appetite, Analyst Says

  • Rosenblatt analyst Andrew Bond initiated Galaxy Digital Holdings Ltd BRPHF coverage with a Buy and a C$6.30 price target.
  • While GLXY's stock price is likely to be highly correlated to the market capitalization of crypto assets in the near term, Bond believes it has built a business model that can withstand volatility and, in some instances, thrive on it. 
  • While the fall of FTX was a near-term setback for digital assets and GLXY's growth prospects, Bond believes it also highlights GLXY's position of strength within an industry that has persevered in the face of a multitude of bad actors and lack of regulatory guidance.
  • Also Read: Argo Blockchain Divests Mining Facility Helios For $65M As It Battles Bankruptcy Concerns
  • The near-term impact of FTX will be slower industry growth. Still, the analyst believes GLXY is winning market share from prominent players that have not had the exact adherence to risk management and transparency. 
  • With the push for greater regulatory oversight now a priority, Bond believes the market structure of digital assets is likely to look similar to traditional asset classes. This is an environment that GLXY has built its business for and is well positioned to continue taking share across its operating businesses.
  • GLXY's book value has more than doubled to nearly $1.8 billion as of Q3 from 2020, despite the Bitcoin meltdown. 
  • While GLXY's investment capabilities have driven growth, Bond believes it will be further supplemented by its operating businesses and prime brokerage offering. 
  • GLXY has positioned itself as a leader in trading, investment banking, mining, and asset management. 
  • While each of its business segments will continue to face new entrants as the market grows, no other company has the breadth of products across digital assets.
  • GLXY's unique industry knowledge, deep bench, first mover advantage, and breadth of solutions positions the company as a critical player in the evolution of digital assets, and at its current valuation of 0.6x of book value, investors get the operating business for free. 
  • Bond believes regulation of the crypto market supports GLXY's business model and could lead to a U.S. exchange listing sooner.
  • Further, Bond believes GLXY is a primary beneficiary of the recent crypto market disruptions given its scale, regulatory compliance, and strong balance sheet, allowing it to continue to win market share and make strategic acquisitions at discounted valuations. 
  • Also SeeWhy Bitcoin- And Ethereum-Related Stock Argo Blockchain Is Surging Today
  • Price Action: BRPHF shares traded higher by 14% at $2.88 on the last check Thursday.
  • Photo via Pixabay
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