Galaxy Digital’s Stock Rises Despite Posting $555M Q2 Net Loss

“I hope it’s the worst quarter this firm ever has,” CEO Mike Novogratz says

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • The company’s assets under management stood at $1.7 billion at the end of Q2, down 40% from the prior quarter
  • Mike Novogratz labels BlackRock’s deal with Coinbase “a monumental shift” for the industry

Galaxy Digital’s stock price was rising Monday morning despite the firm reporting a net loss of roughly $555 million in the second quarter.

The crypto-focused company’s loss comes after Galaxy logged a net loss of about $112 million during the first quarter. Still, the firm’s stock price was $9.09 at 11:30 am ET — up more than 20% on the day. The stock is down about 60% year to date. 

“To put the year in perspective, if you took our losses this year plus our gains last year, we still made over $1 billion in a growth business while we’re investing a ton,” CEO Mike Novogratz said during the company’s earnings call Monday. “As bad as that $550 million headline number feels, I don’t feel nearly as bad as I thought I would, and I hope it’s the worst quarter this firm ever has.”  

The increased loss was due to unrealized losses on digital assets on investments within Galaxy’s trading and principal investments businesses due to digital asset prices. The losses were partially offset by gains within the firm’s mining business, which logged record revenue of about $11 million during the quarter. 

Galaxy’s net digital assets position stood at $474 million at the end of June — down from $910 million at the end of March due to the selling of certain liquid positions to increase its cash position and overall decreases in digital asset prices. 

The company’s assets under management stood at $1.7 billion at the end of the second quarter, down 40% from the prior quarter. Galaxy has $1.5 billion in liquidity, including more than $1 billion in cash, Novogratz said.

Novogratz wrote in a letter to shareholders in May that the company was able to dodge headwinds associated with the collapse of Terra’s UST stablecoin and LUNA token. Deepak Kaushal, analyst for BMO Capital Markets, said in a research note that month that Galaxy does not own algorithmic stablecoins and exited its $400 million position in LUNA during the first quarter. 

Galaxy’s credit portfolio had one instance of a credit impairment in the quarter of about $10 million stemming from the Three Arrows Capital insolvency, executives said.

“While the crypto landscape is less certain than it was, my confidence of where it’s going in the medium term hasn’t waned a bit,” Novogratz said. “We are a growth company; we are investing in people, in product and engineering teams for not the next six months but for the next six years.”

While some crypto firms are laying off employees, Novogratz said, Galaxy intends to increase its headcount from 375 to more than 400 staffers by the end of the year.  

Novogratz also called BlackRock’s recent deal with Coinbase, which gives institutional clients of the asset manager’s Aladdin platform access to bitcoin, “a monumental shift.”

“Crypto’s not going away,” the CEO said. “While retail really got hurt in this, institutions were just starting to get in, and so we see nothing but forward progress there.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

article-image

Plus, Imran Khan’s intriguing experiment on the speeds of crypto onramps

article-image

The SEC has signaled a timeline to issuers that could lead to a July 23 launch for the ETH funds, people close to the process told Blockworks

article-image

PayPal has unequivocally made a name for itself as a crypto adopter among fintech giants

article-image

Also, a look into how the highly-debated SAB 121 could end up shaking out for crypto custodians

article-image

Vance, an Ohio Republican, is largely seen as crypto-friendly

article-image

Plus, all the world is green as prices across the crypto space rally, with solana reaching a nearly two-week high