Galaxy Digital: Updating My Thoughts Post-Nasdaq Listing (Rating Downgrade)

Summary Galaxy Digital Holdings Ltd. heavily outperformed both the S&P 500 and Bitcoin since my last coverage April. I now rate it a Hold. Almost all these gains came from multiple expansion, not from fundamentals, which deteriorated in Q1 2025. That, however, was expected due to a decline in Crypto prices. Much more important are now the upcoming 2025 quarters. Their Nasdaq listing adds upside potential, but I’d only buy GLXY stock after a 10%+ pullback due to short-term overbought signals. Introduction Like many other stocks, shares of Galaxy Digital Holdings Ltd. (Nasdaq: GLXY) have been trading upwards ever since the broader tariff-induced market bottom on April 7. In fact, the stock has appreciated greater than I anticipated when I first covered it on April 17. I recommend reading that article first. I rated GLXY a Buy due to its catalysts, including a crypto price recovery, multiples expanding, and its Nasdaq listing , which finally took place on Friday, May 16. My thesis has worked out quite well so far, with Galaxy Digital having outperformed both the S&P 500 (SP500) and Bitcoin (BTC-USD) by a large margin since April 17. Data by YCharts This portrayal is not to brag but simply to reference my previous arguments and thereby bridge the gap to my new ones: I still believe Galaxy Digital has upside potential ahead, especially from its recent Nasdaq listing. However, an increased valuation and ongoing regulatory risks at today’s prices lead me to downgrade GLXY from Buy to Hold. Galaxy CEO M. Novogratz and Associates celebrating Nasdaq Listing (Coindoo) Q1 2025 Earnings & Broader Outlook Just like I did with Coinbase (COIN), I expected GLXY’s Q1 2025 earnings to be weak, primarily due to dropping crypto prices. Bitcoin lost 19% of its market capitalization this quarter. Therefore, recent earnings are much less important than 2025 upcoming ones. Still, here are the most important developments from the new report: Assets-On-Platform, which includes ETFs/ETPs, Alternatives and Staked Assets declined 30% QoQ to $7 billion. Net income was negative $295 million. In comparison: Q4 2024 and Q1 2024 net income were $174 million and $422 million, respectively. Operating income for Q2 2025 was estimated at $165 million as of May 12 Assuming $150 million net income in Q2 2025, they need to earn at least a combined $510 million in the last two quarters of 2025 to beat FY2024 net income of $365 million, which might be possible when crypto prices reach further ATHs Speaking of crypto ATHs, Bitcoin has recently had an impressive recovery, almost reaching its previous high of $109k. As depicted below, BTC is continuously fighting its $104.5k resistance. I believe that it will soon break out of this resistance as well as the one above at $106.3k. In the short-term, though, I’m expecting a slight pullback to $97.5k or, in the worst case, to $93.5k, which has been an exceptionally strong support level in late 2024 that was recently reclaimed by Bitcoin following the April lows. After set pullback, however, I believe we will see new ATHs, possibly around $150k. TradingView Valuation The only useful conventional valuation metric for a company like Galaxy Digital is the price-to-book ratio, since it largely derives net income from its digital asset holdings. Revenue is far too cyclical, estimates are too little available, and simultaneously too inaccurate. As depicted below, GLXY’s current P/B ratio trails at 2.75X, which has almost doubled from my last review of 1.38X. This makes it clear that almost all recent price gains were due to multiples expansion, reflecting a more euphoric investor sentiment. We have now entered the highs of early- and late-2024 valuations which makes large degrees of multiples expansion less likely. Sure, the P/B could grow further towards its 2021 levels of above 5X and offer over 100% further upside, however, that is a scenario I would not necessarily bet on. Data by YCharts In peer comparison, the recent appreciation that far exceeded most crypto proxy stocks now makes Galaxy Digital look much more expensive, with only Coinbase trading at a higher P/B ratio. Peer-wise, this slightly decreases GLXY’s attractiveness from a valuation standpoint. Data by YCharts Technicals show mixed signals. On one hand, we have seen very strong price action and the breakthrough of the descending trend line that seems like it has now been secured as a support. That one was a major resistance but after price was rejected once it burst right through, indicating the strength behind this movement. I’ve added an additional zone between 33.43 CAD and 36.33 CAD which marks my next key resistance area. Price has already been rejected twice here but should it push beyond, then there is a lot of room for further appreciation. My bear case scenario envisions at least one additional test of this area’s high, which implies approximately 15% upside potential as a base level. In the short-term, on the other hand, I’m looking for a slight pullback due to the sharp rise in daily RSI, which currently sits just below 80. This should not distract any existing investors, however, and might even pose as an attractive entry point for new ones. TradingView On the Nasdaq chart, it becomes clear that GLXY initially spiked 15% which it almost all gave back, potentially indicating a sell-the-news event, or the simple fact some short term traders wanted to make a quick buck. Either way, the Nasdaq listing still has a lot of opportunity to drive gains, both fundamentally and technically. TradingView Risks Regarding risks, not a whole lot has changed. In total, I believe GLXY has more opportunities than risks ahead. I reiterate my previously researched key risks: Continued high regulatory scrutiny: The recent $200 million settlement shows that despite a more crypto-friendly government, Galaxy Digital still operates in an environment subject to significant legal risks. Crypto prices nearing their top: This would indicate a cyclical top for GLXY as well, with EPS dropping heavily amid depreciation of digital asset holdings and declining revenues. Conclusion At current prices, Galaxy Digital Holdings Ltd. stock is a Hold. While I do not think buying now is the worst idea ever, I would only consider doing so amid a pullback of at least 10%. I can definitely still envision a lot of upside potential which is why I have not sold any of my shares yet. However, back in April, I was much more convicted that it was a good buying opportunity due to the low valuation both fundamentally and technically which are now both much higher. Obviously, that does not mean in the slightest that it cannot appreciate further, but placing a buy order now would come too close for me to solely betting on euphoria. That strategy would be contrarian to my fundamental approach, for which I mostly use conservative estimates and only let euphoria and high valuations surprise me positively, if at all. Holding through euphoria is good – buying often not so much, as seen with GLXY’s 2022 decline following its 2021 peak crypto hype.