Galaxy Digital Stock Drop: Analyst Argues For Higher Valuation Despite Poor Earnings

Shares of Galaxy Digital faced a significant decline on Tuesday following the release of disappointing quarterly earnings and revenue figures. The crypto-investment and data-center company reported earnings per share of $0.8 for the second quarter, falling short of Wall Street’s consensus estimate of $0.18.

Revenue for the period totaled $9.1 billion, markedly below analysts’ expectations of $13.9 billion. Consequently, Galaxy’s stock, GLXY, plummeted by 10%, settling at $27.68.

According to Barron’s, the downturn can be attributed to a broader trend affecting the cryptocurrency sector, where trading volumes have waned significantly since spring, pushing digital assets like Bitcoin to retrace 7% below its record price peak. 

Galaxy reported a 22% decrease in digital-asset trading volumes from the first quarter, primarily driven by reduced spot-trading activity. The firm’s crypto sales, which represent its largest revenue stream, fell to $8.6 billion in the second quarter, down from $12.8 billion in the first quarter and $8.8 billion a year prior.

Despite the disappointing earnings report, there was some positive news on the horizon. Galaxy announced that CoreWeave has committed to utilizing all the electrical power approved at its Helios data-center campus in West Texas, where construction is reportedly proceeding on schedule. 

Additionally, Galaxy has agreed to acquire an extra 160 acres of land and a 1 gigawatt load interconnection request adjacent to the campus. 

CEO Mike Novogratz expressed optimism about the Helios project, stating, “Helios will be a top five data center in the world if we get that fully built out.” The company anticipates generating revenue from its data-center operations in the first half of 2026.

In light of the CoreWeave announcement and the expanded capacity potential at Helios, Piper Sandler analyst Patrick Moley noted that shares might be undervalued, suggesting they should trade higher. The firm has rated Galaxy stock as Overweight, with a price target of $36.

In related news, Coinbase Global also experienced a slight dip in its stock, which fell by 1% on Tuesday following the announcement of a $2 billion offering of convertible senior notes aimed at qualified institutional buyers. 

This offering includes $1 billion in notes maturing in 2029 and another $1 billion due in 2032. Additionally, initial purchasers will have the option to acquire up to $150 million more of each series.

These notes will be senior, unsecured obligations with interest payable semi-annually, and they can be converted into cash, Class A common stock, or a combination of both at Coinbase’s discretion. 

To minimize potential dilution resulting from these conversions, Coinbase plans to engage in capped call transactions, partially funded by the proceeds from the offering. 

The remaining funds will be allocated to support general corporate needs, including working capital, capital expenditures, investments, acquisitions, and potential debt repurchases.

Featured image from DALL-E, chart from TradingView.com