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1/25
Rarely do I share price projections in crypto because I& #39;m a product style investor and the market doesn& #39;t have a lot of steady comparables.
But, I& #39;m making an exception, since I think its clear $FTT is grossly under valued vs $COIN and has a potential 18x to $1k~ ahead.
Rarely do I share price projections in crypto because I& #39;m a product style investor and the market doesn& #39;t have a lot of steady comparables.
But, I& #39;m making an exception, since I think its clear $FTT is grossly under valued vs $COIN and has a potential 18x to $1k~ ahead.
2/25
First and foremost, Coinbase $COIN is currently trading at an implied valuation of just shy of $140B based on @FTX_Official& #39;s $CBSE listing, and I think it& #39;s reasonable to expect it could inch higher in the public market. (Pic from The Block. You should subscribe.)
First and foremost, Coinbase $COIN is currently trading at an implied valuation of just shy of $140B based on @FTX_Official& #39;s $CBSE listing, and I think it& #39;s reasonable to expect it could inch higher in the public market. (Pic from The Block. You should subscribe.)
3/25
Coinbase shows a quarterly EBITDA in the $1.1B range, and a net income of around $800M.
Putting that out to the the annual rate, over its valuation, we& #39;re looking at a roughly 45x earnings multiple.
Coinbase shows a quarterly EBITDA in the $1.1B range, and a net income of around $800M.
Putting that out to the the annual rate, over its valuation, we& #39;re looking at a roughly 45x earnings multiple.
5/25
Thanks to @SBF_Alameda& #39;s tweet here: https://twitter.com/SBF_Alameda/status/1379530849025060867
We">https://twitter.com/SBF_Alame... have a rough range of where FTX falls in line with Coinbase on comparables.
Along with some data scraping and estimates, I was able to build a decent model.
Thanks to @SBF_Alameda& #39;s tweet here: https://twitter.com/SBF_Alameda/status/1379530849025060867
We">https://twitter.com/SBF_Alame... have a rough range of where FTX falls in line with Coinbase on comparables.
Along with some data scraping and estimates, I was able to build a decent model.
6/25
What may surprise you, is that FTX wins out on top line volume, even when we don& #39;t account for their other properties.
They achieve this revenue with significantly lower users as well.
What may surprise you, is that FTX wins out on top line volume, even when we don& #39;t account for their other properties.
They achieve this revenue with significantly lower users as well.
7/25
There overall revenue from that volume is a about 6.67x lower than Coinbase though, driven by the fact that their average take-rate (fee) is 0.02% vs Coinbase& #39;s blended take fee averaging out to 0.54%
There overall revenue from that volume is a about 6.67x lower than Coinbase though, driven by the fact that their average take-rate (fee) is 0.02% vs Coinbase& #39;s blended take fee averaging out to 0.54%
8/25
This means that when it comes to net earnings there is a 5.88x delta between the two.
Which isn& #39;t bad considering the smaller footprint, market exposure and overhead for FTX.
This means that when it comes to net earnings there is a 5.88x delta between the two.
Which isn& #39;t bad considering the smaller footprint, market exposure and overhead for FTX.
9/25
You& #39;ll also notice that while we don& #39;t know FTX& #39;s specific user growth numbers, we& #39;re told it did beat the growth numbers for Coinbase both on the quarter and the annual, and those numbers we do know, and they are strong.
You& #39;ll also notice that while we don& #39;t know FTX& #39;s specific user growth numbers, we& #39;re told it did beat the growth numbers for Coinbase both on the quarter and the annual, and those numbers we do know, and they are strong.
10/25
Now we need to account for some unit economic flow. $FTT has 1/3rd of all profits from FTX flow into it, and a nebulous 10% of all other proceeds which I didn& #39;t account for as it was hard to parse what that would be.
Now we need to account for some unit economic flow. $FTT has 1/3rd of all profits from FTX flow into it, and a nebulous 10% of all other proceeds which I didn& #39;t account for as it was hard to parse what that would be.
11/25
Coinbase has a 42.5% net margin so we& #39;re using that as value capture when thinking about the stock. But, I think its fair to say that multiple isn& #39;t exactly the same strength of value capture.
Coinbase has a 42.5% net margin so we& #39;re using that as value capture when thinking about the stock. But, I think its fair to say that multiple isn& #39;t exactly the same strength of value capture.
12/25
We also had to specifically account for two things which aren& #39;t covered well in financial models.
$FTT buy and burn, and recurring $SRM airdrop to $FTT holders.
To do this I factored these in as rebates on the unit cost.
We also had to specifically account for two things which aren& #39;t covered well in financial models.
$FTT buy and burn, and recurring $SRM airdrop to $FTT holders.
To do this I factored these in as rebates on the unit cost.
13/25
Once we do that, we can see that across every sliceable metric per unit and per cost, FTX is the far better financial return, value capture and marketshare capture.
Once we do that, we can see that across every sliceable metric per unit and per cost, FTX is the far better financial return, value capture and marketshare capture.
14/25
Despite this, Coinbase& #39;s implied trading is at a 45.62x P/E multiple, where as $FTT is at a 12x (which is crazy low for any asset these days. 30x is often considered the floor for boring low growth stocks)
Despite this, Coinbase& #39;s implied trading is at a 45.62x P/E multiple, where as $FTT is at a 12x (which is crazy low for any asset these days. 30x is often considered the floor for boring low growth stocks)
15/25
If $FTT had the same multiple as Coinbase then it& #39;d be trading at $193 per $FTT today.
But there are some advantages we have to account for with Coinbase.
If $FTT had the same multiple as Coinbase then it& #39;d be trading at $193 per $FTT today.
But there are some advantages we have to account for with Coinbase.
16/25
First it has some brand effect, which we can also call the Robinhood effect. Meaning retail investors familiar with cool modern brands are over buying them compared to value. I applied a 15% deduction to account for this.
First it has some brand effect, which we can also call the Robinhood effect. Meaning retail investors familiar with cool modern brands are over buying them compared to value. I applied a 15% deduction to account for this.
17/25
$FTT also isn& #39;t purchasable in the US, or yet storable in retirement savings accounts and tax free accounts like $COIN will be, so I deducted 18% and 15% respectively for those.
$FTT also isn& #39;t purchasable in the US, or yet storable in retirement savings accounts and tax free accounts like $COIN will be, so I deducted 18% and 15% respectively for those.
18/25
That gives us a FMV **TODAY** of $100.83, a 2x from its current price.
That gives us a FMV **TODAY** of $100.83, a 2x from its current price.
19/25
But there was a major change this year, where @FTX_Official bought out @blockfolio and integrated @PayPal and @circlepay on @solana for easy onboarding in hundreds of countries.
These users are more like Coinbase users and likely to pay a higher multiple.
But there was a major change this year, where @FTX_Official bought out @blockfolio and integrated @PayPal and @circlepay on @solana for easy onboarding in hundreds of countries.
These users are more like Coinbase users and likely to pay a higher multiple.
20/25
If the average fee blended rate on FTX shifted from 0.02% to 0.087% (which is roughly what I estimate @Binance& #39;s avg fee is, and is still 6.2x lower than Coinbase& #39;s)
Then I think with very conservative growth (>20%) we& #39;d be looking around $440~ per $FTT after 3-years
If the average fee blended rate on FTX shifted from 0.02% to 0.087% (which is roughly what I estimate @Binance& #39;s avg fee is, and is still 6.2x lower than Coinbase& #39;s)
Then I think with very conservative growth (>20%) we& #39;d be looking around $440~ per $FTT after 3-years
21/25
If they manage to resolve the brand impact, non-us, non-tax free account penalties, increase their average fee with mainstream users, and keep growing (at a slowing rate of 50% off previous years growth each year), then 3 years we& #39;d be in the $935~ per $FTT range.
If they manage to resolve the brand impact, non-us, non-tax free account penalties, increase their average fee with mainstream users, and keep growing (at a slowing rate of 50% off previous years growth each year), then 3 years we& #39;d be in the $935~ per $FTT range.
22/25
To sanity check that number, assume $FTT has burned 10M this year and continues to burn 50% less each year (I think they& #39;ll burn more)
With no dilution and $935, that& #39;d put the mcap at $100B, still 33% less than $COIN& #39;s cap.
To sanity check that number, assume $FTT has burned 10M this year and continues to burn 50% less each year (I think they& #39;ll burn more)
With no dilution and $935, that& #39;d put the mcap at $100B, still 33% less than $COIN& #39;s cap.
23/25
If they diluted the full company reserve, it& #39;d be a mcap of $298B, at the 45x multiple that means they& #39;d need an earnings of $6.6B. Given the 82% margin, that& #39;d be a revenue of $8B.
If their fee hits the 0.087% threshold then they& #39;d need $9T in trade volume.
If they diluted the full company reserve, it& #39;d be a mcap of $298B, at the 45x multiple that means they& #39;d need an earnings of $6.6B. Given the 82% margin, that& #39;d be a revenue of $8B.
If their fee hits the 0.087% threshold then they& #39;d need $9T in trade volume.
24/25
$9T in trade volume sounds crazy. Until you remember than @binance is on pace to do about $39T in trade volume in the forward looking year.
$9T in trade volume sounds crazy. Until you remember than @binance is on pace to do about $39T in trade volume in the forward looking year.
25/25
Meaning if @FTX_Official can get 23% of the volume of Binance over the next 3 years, and improve their fee through Blockfolio to still be one of the cheapest in the industry, then nearly $1000~ $FTT is possible with full dilution in 3 years, but $500+ $FTT is conservative.
Meaning if @FTX_Official can get 23% of the volume of Binance over the next 3 years, and improve their fee through Blockfolio to still be one of the cheapest in the industry, then nearly $1000~ $FTT is possible with full dilution in 3 years, but $500+ $FTT is conservative.
