This Stock Continues To Appear Highly Undervalued
To investors, The Sohn Conference, where investors pitch their best investment idea, was hosted on April 3rd. The next day, I wrote to this group and said that I would have pitched DeFi Technologies, Inc (NEO: DEFI) (GR: R9B) (OTC: DEFTF) if I had attended Sohn this year. You can re-read my analysis here. Here is an excerpt on why I thought DeFi Technologies was highly undervalued:
It appears the market is starting to pay attention. The stock is already up more than 16% in the ~ 6 weeks since I wrote about my pick. But I think the company is still undervalued. DeFi Technologies released their Q1 earnings report yesterday and the numbers were incredibly impressive. Here are the highlights:
These numbers show a business that is on an annualized profit run rate of $15 million USD, yet the company is only trading at ~ $180 million market cap. What is interesting though is that DeFi Technologies gave 2024 guidance yesterday for about $87 million in revenue and more than $75 million in profit. If you take those numbers as reported, this means that DeFi is only trading at ~ 2.4x their projected 2024 profit. Now you see why it appears to be an undervalued company. But let’s say you don’t believe the company’s guidance. The business still reported approximately the same revenue in the first 90 days of the year that it did in all of 2023. A growth rate like that would suggest a much higher multiple for a company that has high capital efficiency. There was one other thing buried in the earnings report that is worth paying attention to. The company said:
If I am reading this correctly, DeFi Technologies is saying that they have already booked $40 million of revenue in Q2 from a newly created business unit that didn’t previously exist. That would mean that the company has done 5x growth in revenue over their 2023 numbers in just the first 5 months of the year. Regardless of how you cut the numbers, I still believe that DeFi Technologies is undervalued. Given this additional information in the latest earnings report, I believe DeFi Technologies has a good chance of being one of the best performers from any stock that was pitched at the Sohn Conference in April. I am not merely sharing my opinion though. I am a shareholder of DeFi Technologies that will benefit if the market figures out the company is undervalued and I will be financial punished if the company ends up not performing how I believe it will. We also sold one of our companies, Reflexivity Research, to DeFi in a 100% all-stock deal earlier this year. True skin-in-the-game. I’ll continue to monitor it and keep everyone updated. Hopefully my analysis is right, but you should do your own research. Nothing I have said here should be confused for investment advice. I am merely trying to highlight a company that shows how misunderstood crypto companies are by the public markets. Eventually the market will figure it out, but for now there still seems to be quite a bit of opportunity available to various public market investors who take the time to do the work. Hope you all have a great day. I’ll talk to everyone tomorrow. -Anthony Pompliano Reader Note: Today is a free email available to everyone. If you would like to receive these letters each morning, please subscribe to become a paying member of The Pomp Letter by clicking here. Cyrus Shirazi is the Founder & CEO of Haven, a brand new company that is dedicated to focusing on exactly to solve all your accounting needs as a startup founder or business owner. In this conversation, we talk about how to build a venture scalable business with a service, why being profitable early on is a huge advantage, identifying great talent, operational structure, evaluating customers, and long-term vision for Haven. Listen on iTunes: Click here Listen on Spotify: Click here Podcast Sponsors
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. You're currently a free subscriber to The Pomp Letter. For the full experience, upgrade your subscription. |
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