Voyager Digital Ltd

Voyager Digital Ltd. (CSE: VYGR) is a crypto-asset broker that provides retail and institutional investors with a turnkey solution to trade crypto assets. Voyager offers customers best execution and safe custody on a wide choice of popular crypto-assets.

Key highlights 

• Improving AUM: The company’s Assets Under Management (AUM) is approximately USD 1.15 billion, up 5X from USD230 million at the end of December 2020 and up from USD 800 million as of February 4, 2021. Besides, it surpassed 1 million trades in February, which exceeded January numbers. Furthermore, the company aims to achieve an AUM of USD 20 billion by 2025.

Source: Company 

• Massive market opportunity:The demand for cryptocurrencies has increased over the past year as it has become more widely accepted. Today the crypto market stands at a mark of USD 1.5 trillion. In contrast, the gold market and global investable assets market stand at USD 9 trillion and USD 120 trillion, respectively, which leaves enough opportunity to grow. The company’s platform has solved many problems faced by the people or institutions that trade cryptocurrencies, which has increased its number of trades.

Source: Company 

• Robust product pipeline: The company expects to continue bringing new products to its platform as well as to advance its geographic expansion. In 2021 and beyond, the Company anticipates adding debit cards, credit cards, stock trading and the ability to trade on margin to its offerings. Complementing this, it is also looking to grow internationally by expanding into Canada and Europe. 

Financial overview

Source: Company

• In Q2 2021, the company posted jump in revenues to USD 5.57 million, against USD 88.14K in the previous corresponding period, the rise in revenue was primarily due to increase in Fees and increase in interest revenue.
• Total operating expenses in Q2 2021, increased by USD 3.57 million to USD 6.30 million, against USD 2.74 million in pcp, mainly due to higher G&A expenses.
• The company posted net loss of USD 9 million in the reported quarter, against a loss of USD 980K in pcp. 

Risks associated with investment

A significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. A decline in use or popularity of cryptocurrencies may reduce the amount or frequency of buying or trading cryptocurrencies, which may adversely affect the Company’s growth and profitability. 

Stock recommendation

The demand for cryptocurrencies has increased over the past year as cryptocurrencies have become more widely accepted. The company is getting benefitted by its platform through which it has increased its trading numbers. At present, its Assets Under Management (AUM) is approximately USD1.15 billion and aims to achieve an AUM of USD 20 billion by 2025, which is positive. Moreover, it expects to continue bringing new products to its platform and expanding in more geographies. Recently, we saw a rally in stock on news of its acquisition of LGO SAS, an AMF regulated entity based in France, and LGO Europe SAS, which helped its stock to generate a return of 10x, and now the company is trading on high valuations, against the industry.

Source: Refinitiv (Thomson Reuters)

Considering the stretched valuation, recent rally in stock price and risks, we prefer to remain on the side-line and recommend an "Expensive" rating on the stock at the closing price of CAD 19.16 on March 9, 2021.

1-Year Price Chart (as on March 09, 2021). Source: Refinitiv (Thomson Reuters)

Disclaimer

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