Galaxy Digital Has Strong Momentum Across All Business Lines: Canaccord

• Galaxy’s net income rose 40% from the previous quarter to $422 million.

• The approval of spot bitcoin ETFs was a catalyst for the increase in counterparty engagement.

• The firm could pursue both mining and AI hosting over time, Canaccord said.

Galaxy Digital (GLXY) is evolving its business in a thoughtful and methodical way and, while the regulatory backdrop remains challenging, the company’s opportunity set and competitive positioning remains compelling, broker Canaccord Genuity said in a report on Tuesday after the crypto financial services firm published first-quarter results.

The Toronto-based company founded by CEO Mike Novogratz said net income rose 40% from the quarter before to $422 million, and the broker said it expects the positive momentum to continue.

“We are encouraged to see solid progress in growth and maturation in each of the company’s three operating units coming into view over the next few quarters,” analysts led by Joseph Vafi wrote.

Galaxy Trading grew its total number of counterparties to 1,161 in the first quarter from 1,052 in the fourth, and counterparty trading revenue rose 79% to $66 million, the report noted. The approval of spot bitcoin (BTC) exchange-traded funds (ETFs) in January was behind the development.

“Spot bitcoin ETF approvals have been a major catalyst for the increase in counterparty engagement as some of the more traditional asset managers and hedge funds are entering/reentering the space,” the authors wrote.

GalaxyOne also saw further traction, with over 75 institutional clients and more than $1 billion of assets on the platform, the note said. “This is a great set of customers for the company to offer its full suite of products, including custody, lending, spot trading, hedging and derivatives.”

The asset-management business also enjoyed good momentum, ending the quarter with assets under management (AUM) of $7.8 billion, an increase of 50% on the previous quarter, Canaccord said.

“Galaxy continues to grow its infrastructure and GK8 business, growing its assets under stake by 100% quarter-on-quarter to $486m,” the report added. The firm bought self-custody platform GK8 for $44 million in February last year.

The firm also increased its proprietary mining hashrate and the Helios facility “presents an opportunity for Galaxy to pursue both mining and AI hosting over time,” the broker said. Canaccord has a buy rating on Galaxy shares with a C$17 price target. The stock closed at C$12.41 on Tuesday.