We have been very vocal about $VYGVF and how much we love the stock. It is down -62% from it's high in April and we LOVE it more! Here is why you should BUY $VYGVF...
Why is the stock down? The first reason is that #crypto is also down. #bitcoin is down -46% from it's April high and many other #altcoins are down much more. Sentiment around #crypto has brought the $VYGVF stock price down with it.
In theory, results of $VYGVF are correlated to #crypto prices. This IS true but they are even more exposed to ASSETS UNDER MANAGEMENT and TRADING VOLUME. They make MONEY off of trading, not off the price of #crypto. They have NO direct exposure to #crypto prices for earnings.
Growth in the number of customers, how big their balances are at $VYGVF and how often they trade are the much bigger drivers. #crypto prices have fallen a ton but $VYGVF has been growing MASSIVELY on all of these other metrics.
Despite #crypto getting crushed the last few months, $VYGVF pre-announced AWESOME results last week. In the quarter ending Dec 2020 they did $4mm of revenue. Then in Q1 2021 they did $60mm and in Q2 2022 they did $110mm - this is NUTS! They also said profit margins are 50%!
The question then becomes IS this sustainable? Well unless you think #crypto goes down another -50% from here or goes away - they should continue to post solid growth. We do NOT think #crypto is going away.
If #crypto finds a "base" +/-25% around current levels we think the company can earn $1.50+. This means the stock trades at just 7.5x EPS. Also - in theory - their earnings should translate into cash flow so this is a 13% FCF yield. This is IF #crypto just stays here...
We think #crypto will return to growth at some point after this vicious correction and $VYGVF can earn much more!
The best comparable for the company would be the online brokerages like $SCHW which trades at 20x EPS. Using this multiple on our $1.50 would be a $30 stock or a TRIPLE from current levels.
Don't even get us started on the comparable to @RobinhoodApp! $VYGVF has TRIPLE the margins with higher growth. $HOOD is going public at $35bb market cap or 10x+ revenue. At the same valuation, $VYGVF would be worth $40+.
So WHO CARES? Obviously the #stockmarket doesn't right now! IF, though, we are right then the company can use it's own FREE CASH FLOW to buy back the stock.
There also has been a TON of consolidation in the space with all the big brokers having very little direct exposure to #crypto. Why wouldn't $SCHW @Fidelity $MS buy $VYGVF? $5bb ($35 a share) is NOTHING to these companies.
BOTTOM LINE - BUY $VYGVF! As long as #crypto doesn't disappear this stock is going MUCH HIGHER. Eventually even if the #stockmarket doesn't agree, other companies will acquire it. #HODL
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