In the latest monthly letter, which came out over the weekend (if you haven’t seen it yet, it’s right here), I briefly mentioned Exodus (NYSE: EXOD) as being one of the stocks included in the new Bitwise “Bitcoin Standard” ETF which seeks to hold publicly traded companies with over 1,000 BTC in their corporate treasuries.
Exodus has 1,800 BTC along with 2,617 ETH and over 13 million units of sundry “other tokens” (we don’t know what they are but they have them marked-to-market at a little over $4M in their last 10-Q)
Monday hit, I was working on getting caught up from the holidays and a couple readers emailed me that EXOD had gone completely parabolic, up 50% on the day. Quite the move.
I hadn’t entered yet myself, but I did get a chance to take a bit of a closer look at them, here’s the highlights:
- 40% to 50% gross margins
- Profitable: close to $45M net income for 9 months, on track for $60M on the year
- Not much debt. Their one long term liability is about $10M in deferred income taxes (good problem to have)
90% of their revenue is just taking exchange fees from people swapping between currencies in their wallet. I love this model, it’s a decentralized wallet, self-custody – they do have fiat onboarding but it’s not a huge part of the business.
They also make a bit of money from staking. I imagine that will just pick up over time – and of course, they’re building up that Bitcoin treasury.
This is one of those proverbial “picks and shovels” businesses we love so much, and with Bitcoin having pulled back to the low 90’s ($93K as I write this), EXOD stock has come off 17% today, so far.
They’re back under a $1B market cap and I think whatever we can pick up under that level will do good for us.
ACTION: Enter EXOD on weakness under ~ $40 ($1B mkt cap) If you want to weight it you can go as high as 4% or 5%, we are going to rebalance some of the miners in the upcoming issue (trim BITF, RIOT and/or CLSK to make room).
That’s it for now.
