Duncan@FloodCapital
Here is the case for >$250 $GLXY in the next 3-7 years. Everything is lining up for them, fundamentals, the chart, and massive macro trends.
Over $124 trillion in wealth is set to be passed down to the younger generations through now till 2048 (source Cerulli). Investments in Crypto, AI and Robotics will only accelerate as the younger generation see and know these things to be the future. $GLXY is excellent exposure to 2 of these 3 themes. Paging @amitisinvesting, @StockSavvyShay, @RaoulGMI
Fundamentals (the 3 pillars of $GLXY):
The Balance Sheet:
~$3B of crypto, cash and crypto infra investments of the highest quality on their balance sheet. 2 extremely recent examples - I am pretty sure $GLXY is both an investor in $XPL and @doublezero which both launched in the past week and are trading an order of magnitude higher there last round (don't quote me on this though).
Galaxy's balance sheet is full of gems but the reporting here can make it difficult to fully understand what they own which IMO makes it not get the credit it deserves.
The Crypto Business Lines, they do literally everything crypto, the Goldman Sachs of crypto! (some highlights):
- The 15+ DAT deals Galaxy has done which will generate tons of IB fees, fees from execution, staking and custody fees, in total this could be hundreds of millions of dollars over the next couple years. Most recently they've done $FORD and others like $BMNR, $SBET, Reserve One, $KWM, $MCVT, $DDC, $LGHL, $FGNX, + more.
- Their GalaxyOne initiative which I am super excited about and they've been working on for a long time. This is Galaxy's push into a retail facing "everything app" which with the right distribution could compete with $HOOD and $COIN. This can not be understated and could completely transform the stock, allowing them to break into to a high margin retail facing business providing an array of financial services.
- A huge push for tokenization, they took the first step tokenizing $GLXY on $SOL and also have a fully owned tokenization/custody subsidiary @GK8_Security. If Galaxy can be at the forefront of equity tokenization this could be absolutely huge for them.
- Their @AllUnityStable JV in which Galxay owns 33% alongside Flow Traders and Deutsche Bank, the first fully regulated MiCA compliant EURO stablecoin. Could be the $CRCL of Europe!
The Data Center Business:
- Galaxy already has 800MW of power approved and a 15yr lease signed with CoreWeave $CRWV which should net them $1.2B/year in average annual revenues at 90% EBITDA margins.
- Galaxy also has an additional 2.7GW of power under study at their Helios campus. If they are able to get the full 3.5GW approved and contracted out on similar terms to the CoreWeave lease then they'd be generating ~$5.25B/year in average annual revenues at 90% EBITDA margins!!! (Market cap right now is only ~$13B-$3B in net balance sheet = $10B in implied equity value for both the crypto + data center business lines).
^@jonathan_mg27 from Galaxy IR notes "On data centers, the conversations were all about execution: hitting construction milestones and delivering critical IT to $CRVW on time and on budget. And everyone wants the inside scoop on when ERCOT’s review of 2.7GW of additional power at Helios will be completed. We’re working on it!"
- Management has also guided towards the first 800MW tranche of the remaining 2.7GW should be approved by ERCOT by EOY/"single digit months" if they can lease this out to a large hyperscaler like $ORCL, $GOOG, $MSFT, $AMZN, $META, etc it could be a huge accelerant/catalysts for the market appreciating the data center business more!
- Zooming out, Galaxy is building Helios which has 3.5GW of potential power, currently on-par with plans from the largest big tech/AI firms in the world.
Keep in mind these AI Data Center buildouts are completely different then data center 1.0 from companies like $DLR at a $60B market cap which has ~2.7GW of operating capacity from ~300 data centers.
These 1.0 data centers are ~10MW a site vs 3.5GW in one campus with Helios.
So it's a totally new build and Galaxy is making partnerships with leading players like Clayco & $CRWV to build to custom AI workload specs.
Galaxy expanded their power pipeline by 1GW last earnings and were evaluating "~40 BTC Mining sites" that could be converted into AI data centers.
We could literally see $GLXY become a leader in North America for AI data centers which is likely a 1T+ market over the long term given compute demand is infinite.
Look at $FRMI trading at $18B pre revenue on the guidance/aspirations of 11GW by 2038. If Fermi isn't bullshitting Galaxy should be able to easily guide to this and probably exceed it given their established position.
The chart:
Chadlord @buyerofponzi called $PLTR at $30 in Sept 2024 and now says:
"This might be my highest conviction tradfi trade since $PLTR at $20+... This is the exact same setup So I will say the same exact thing again it feels like i should go all in $GLXY for the next year"
Check out his fractal below. + $GLXY is right near ATHs - breakout soon?
Macro:
I firmly believe crypto & AI (alongside Robotics) will be the 3 largest investment trends of the next decade and Galaxy is knee deep in 2 of the 3. Feels like everything is lining up for them.
As I have said before I think a $250 target for $GLXY in the next 3-7 years is realistic given this. Look at the math on their 3.5GW alone...
3.5GW contracted out to on the same lease as $CRWV is $5.4B a year in revenues, 90% EBITDA margins = 4.86B in EBITDA * 25x multiple = $121B Enterprise Value - $26B in debt = $95B in equity value / 400M shares = $237.5/share.
This doesn't include the crypto business either!
Bonus the team at Galaxy is amazing and management continues to deliver on promises and be visionaries @novogratz @cferraro06 @austorms @brian_wright21 @jonathan_mg27 I would love guidance from them on their next earnings about the future potential/scale/plans for their data center business (like Fermi $FRMI targeting 11GW by 2038 trading at $18B pre revenue!!)
Disclosure: I am very long $GLXY! DYOR!
