Galaxy Digital stock pullback a buying opportunity — Analyst

Galaxy Digital (GLXY.TO) shares are a bargain after disappointing second-quarter earnings sent the stock down roughly 16%, according to an Aug. 1 analyst report shared with Cointelegraph. 

Investors retreated from the stock after Galaxy revealed a series of bearish metrics during its second-quarter earnings call. According to the report, which was penned by Benchmark fintech analyst Mark Palmer, these included a larger-than-expected net loss, a decline in counterparty trading revenue, and a nearly 8% drop in book value per share.

According to Palmer, the stock route ignores “several positive developments in the build-out of the company’s institutional digital asset platform” and progress on other “key initiatives, including its ongoing effort to uplist its stock to the Nasdaq in the U.S., and its plans to expand and monetize the high-voltage power capacity at its flagship Helios data center in Dickens County, Texas.”

Palmer said Helios stands to benefit from “the anticipated demand from artificial intelligence (AI) and high-performance computing (HPC) projects for enormous amounts of power.”

The selloff follows a period of sustained outperformance since January during which Galaxy’s market capitalization almost doubled.

“The company’s sequential operating performance during 2Q24 looks far less sour when the extraordinary strength of its 1Q24 report is considered,” the report said.

In June, Galaxy partnered with asset manager State Street Global Advisors to launch new exchange-traded funds (ETFs) that provide exposure to digital assets. The two investment firms hinted that these ETFs would expand “beyond” spot Bitcoin BTC ETFs.

In a June 26 filing to the United States securities regulator, State Street proposed a SPDR Galaxy Digital Asset Ecosystem ETF that would invest in publicly traded digital asset firms.

Galaxy has also ventured into tokenization, reportedly tokenizing a Stradivarius violin from 1708 to use as collateral for a multimillion-dollar loan issued to Animoca Brands co-founder Yat Siu. The digital assets firm turned the violin into a non-fungible token (NFT) and will hold the NFT and the physical version until Siu settles the loan.

Palmer reiterated a “Buy” rating on Galaxy’s stock, with a price target of $19 CAD ($14). At the time of publication, the stock traded at around $14 CAD ($10).