A sharp selloff and the largest crypto exchange hack in history make it a good time to buy shares of Exodus Movement, according to Benchmark. The company’s market capitalization has plummeted more than 60% over the past five weeks.
“We believe the recent pullback in the price of EXOD’s shares…has created a compelling opportunity for investors to gain exposure to a firm with strong operating momentum, the demonstrated ability to scale rapidly, and a tailwind from the more accommodative stance toward the crypto space in the U.S.,” Benchmark equity analyst Mark Palmer wrote Wednesday in a note to clients.
Founded in 2015, the company's core business revolves around the Exodus Wallet, a non-custodial wallet that enables users to store, manage and exchange over 1,000 cryptocurrencies.
“Self-custody crypto wallets give users full control over their private keys,” Palmer wrote. “The case for crypto self-custody was underlined a couple of weeks ago when centralized crypto exchange Bybit was the target of a record-breaking hack of 400k ether (worth ~$1.5bn) believed to have been executed by hackers working for the North Korean government.”
Exodus Movement derives about 85% of its revenue from the exchange aggregation feature within its crypto wallet, Palmer said, which consolidates liquidity from multiple third-party exchange API providers and “thereby offers users attractive rates and fast fulfillment times across more than 60,000 crypto token pairs.”
On March 3, Exodus Movement’s fourth-quarter earnings report featured strong preliminary results for the current quarter, including revenue of $44.8 million, up 143% year over year, and exchange provider processed volume of $2.33 billion, up 172%.
The company also said its preliminary exchange provider processed volume for January and February was $1.45 billion, already up $100 million from last year's entire quarter.
Palmer also touted the company’s “wallet-as-a-service” business, which leverages its aggregation technology in XO Swap, its crypto swap engine that it integrates into the platforms of partners such as Ledger and Magic Eden.
Palmer initiated coverage on the stock with a “buy” rating and $38 price target. Shares traded around $25.20 at publication time, according to The Block’s EXOD price data.
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