Ian Hunter, portfolio manager and founder of Hunter Value Capital, discusses Voyager Digital (VYGR on the Canadian Stock Exchange, VYGF over the counter in the US). Voyager Digital, a crypto brokerage founded by a former E-Trade executive, has a market cap of approximately $2.5 billion. Ian holds this stock, believing it has high potential returns over the next 3-4 years.

Voyager’s monthly account growth rates have been declining from 70% to 30% over the past five months. Despite this, Ian argues that the current market price of $15 undervalues the company. He estimates that Voyager’s current accounts generate $0.70 to $1.00 EPS, suggesting a P/E ratio of 15-20 times. To consider this valuation fair, one must believe that Voyager’s expansion into Europe and Canada will fail, US growth has stopped, and crypto prices will not recover.

However, Ian is optimistic due to several factors: market volatility benefits brokerages, increasing mainstream crypto adoption, the rise of decentralized finance (DeFi), and inflation driving demand for Bitcoin. He projects a conservative P/E ratio of 30 times if Voyager achieves 30% account growth next quarter. Ian also notes potential uplisting to the Toronto Stock Exchange and Nasdaq, enhancing growth prospects.

Even if Voyager’s assets under management (AUM) reach $25 billion by 2025, a conservative 5x revenue multiple could yield a $12.5 billion market cap, a 5x increase from today. Ian acknowledges risks but remains confident in Voyager’s potential. Contact him at ian@huntervalue.com for further discussion.