Currently share price is back near its 52 week low so whatever they are doing seems not to be working even though crypto itself over the past months has risen.
If their revenue is generated merely as a function of AUM shouldn't the higher crypto price have led to better Profitability and going forward with crypto seemingly being accepted, alto not necessary endorsed, would you see any liklihood of another financial institution buying them to participate in the crpto market on an arms length basis?
Could any of the lack of performance relate to share dilution and lastly at this level could its current price justify a small investment?
Craig
Activity on Wonderfi's platforms are progressing fairly well, with crypto trading volumes increasing year-over-year and its AUM increasing. Its sales have grown to a decent level of $53M on a trailing-twelve month basis, but its recent quarter was unprofitable, although on a trailing-twelve month basis it is nearing profitability.
It does not have a large digital asset treasury balance, unlike other bitcoin miners and crypto-related stocks. This could be one reason for its lackluster performance, given that it benefits from increasing trading volumes, but if prices increase, its balance sheet does not benefit as much as other bitcoin miners will, as they hold a larger percentage of their balance sheet in bitcoin, Ethereum, etc.
It's nearly cash flow positive, has reduced its share count over the years, priced decently at 9X forward earnings and less than 1.0X book. Its trading platforms are fairly well-recognized by Canadians, but a lot hinges on continued trading volumes.
If crypto prices improve into year-end or next year, we think the fundamentals can improve, and given its decent valuation and near profitability, we would be OK with a small position size, while acknowledging its risks, and high levels of volatility.