This Company Just Announced Record Breaking Annual Results

To investors,

There are very few crypto-related publicly traded companies available to investors. If you remove energy companies like bitcoin miners and bitcoin treasury companies, such as MicroStrategy or Metaplanet, the available pool of companies gets even smaller.

One company that I have talked about a few times over the last year is DeFi Technologies (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF). They trade in Canada and describe themselves as “a financial technology company focused on the convergence of traditional capital markets with the world of decentralized finance.”

I wrote to this group in April, in May, and in August about why I thought DeFi Technologies was undervalued. During that timeframe, the company saw its stock price rise from ~$0.51 to $2.51 at the close on Friday.

A big part of the increase in stock price was because the business has been performing incredibly well. The numbers for full year 2024 were released this morning and it was a record year of growth and results.

Here are the key financial takeaways from the press release:

* Adjusted Revenue: Adjusted Revenues of $31.1 million USD (Q4) and $144.8 million USD (annual) for the three and twelve months period ended December 31, 2024

* Adjusted Net Income: Adjusted Net Income of $13.9 million USD and $84 million USD for three and twelve months ended December 31, 2024, reflecting robust operational performance.

* Adjusted EBITDA: Adjusted EBITDA of $14.7 million USD and $80.4 million USD for the three and twelve months ended December 31, 2024.

Remember, DeFi Technologies did ~$10 million in revenue for all of 2023, so these are monster improvements. The company did approximately 8x more in Adjusted Net Income and EBITDA in 2024 than it did in revenue the year prior.

Not bad, right?

But here is the thing — even though the stock has appreciated ~400% in 12 months, the company is probably still undervalued.

We can see in the earnings press release that the total value of DeFi Technologies’ Cash, Treasury, and Venture Portfolio is $93.8 million USD as of December 31, 2024. This means the company is valued at approximately $700 million after taking those balance sheet assets out.

If the business did ~$80 million in adjusted EBITDA/net income then the company is currently trading at a 8.75x multiple to the last 12 months EBITDA/net income. That is insane.

Galaxy is trading at 10.7x trailing 12-month net income. Coinbase is trading at just under 17x trailing 12-month net income. And Blackrock is trading at 22.9x trailing 12-month net income.

Now I am not claiming that DeFi Technologies should trade at the same multiples as Coinbase and Blackrock, but I am arguing that having a net income multiple that is 50% lower or more is probably the wrong answer too. Add in the fact that growth is measured in hundreds of percent for DeFi and it only bolsters the argument that the company is undervalued.

So where do we go from here?

A big part of how DeFi Technologies, and many other crypto-related public equities, will be valued depends on how the underlying liquid crypto assets perform through the rest of 2024. A good amount of DeFi’s revenue comes from their crypto ETPs, which see their nominal management fee amount fluctuate with the AUM of the funds. That AUM changes substantially as the price of crypto assets goes up or down.

So if you think crypto prices have not peaked for this cycle, then crypto-related equities are probably a place you will spend time looking for opportunities. If you think the cycle peaked and we are headed towards a bear market, then you are likely running for cash and perceived safety.

In my humble opinion, I don’t think the market has peaked. It is hard to be bearish when the US government and other countries are embracing bitcoin. But I am wrong all the time, so who the hell knows what will happen.

Additionally, the thoughts I have shared with you today are biased. I hold shares in DeFi Technologies personally as an investor and advisor, along with indirectly through my investment firm Professional Capital Management after we sold Reflexivity Research in January 2024. I do my best to share my thoughts transparently in these letters, but if you disagree with something that I have written today please reach out with your rebuttal.

I am always trying to learn. Many of you are smarter and more experienced than me. Don’t cheat me out of an education!

Speaking of learning, I have been fairly public about my lessons learned during the 2021 bull market and the subsequent 2022 bear market. No one likes to hold assets through a big drawdown, so I am planning to sell many of my liquid investments outside of bitcoin at some point in 2025 (first rule of bitcoin: never sell your bitcoin!). I don’t know when, how, or why at the moment, but I want to give everyone fair warning about my current thought process.

I am a believer that the 4-year cycles may look slightly different, yet they have not ended. But for now, companies like DeFi Technologies (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) still look undervalued to me. We will see what happens in the coming weeks and months.

Hope you all have a great start to your week. I’ll talk to everyone tomorrow.

- Anthony Pompliano

Founder & CEO, Professional Capital Management

How Bitcoin & AI Will Change The World with Jordi Visser

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You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren't finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

DISCLAIMER: The author of this letter is not a securities dealer or broker, investment adviser or financial adviser, and you should not rely on the information herein as investment advice. The author is a paid advisor to DeFi Technologies. If you are seeking personal investment advice, please contact a qualified and registered broker, investment adviser or financial adviser. You should not make any investment decisions based on this communication. Examples that the author provides of share price increases pertaining to a particular Issuer from one referenced date to another represent an arbitrarily chosen time period and are no indication whatsoever of future stock prices for that Issuer and are of no predictive value. Stock profiles contained herein are intended to highlight certain companies for your further investigation; they are not stock recommendations or constitute an offer or sale of the referenced securities. The securities issued by the companies profiled should be considered high risk; if you do invest despite these warnings, you may lose your entire investment. Please do your own research before investing, including reading the available public filings, press releases, and risk disclosures. It is our policy that information contained in this profile was provided by the company, extracted from regulatory filings, company websites, and other publicly available sources. The author believes the sources and information are accurate and reliable but cannot guarantee it.

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