On chain yield funds put Galaxy Digital (GLXY) in focus

Galaxy Digital (NasdaqGS:GLXY) is back on investor radar after reaching an agreement with SharpLink to form the Galaxy SharpLink Onchain Yield Fund, a planned US$125 million vehicle that will target decentralized finance yield strategies.

That SharpLink fund announcement lands after a busy few weeks, with Galaxy Digital filing a US$7.77b shelf registration and a US$500m at the market equity offering, while also teaming up with State Street on an onchain liquidity sweep fund. Against this backdrop, the stock has a 30 day share price return of 14.59% and a 90 day share price return of 36.70%, while the 1 year total shareholder return of 29.87% and 3 year total shareholder return of more than 7x suggest that momentum has been building over a longer period.

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With Galaxy Digital’s shares up sharply over 3 months and trading at a reported 42% discount to the average analyst price target, investors may need to consider whether this represents a genuine opportunity or whether the market is already pricing in future growth.

Most Popular Narrative: 24.9% Undervalued

Galaxy Digital’s most followed narrative pegs fair value at $39.42, well above the last close at $29.61. This puts a spotlight on what is driving that gap.

Advancements in real-world asset tokenization and the convergence of onchain and offchain capital markets are creating new, durable revenue streams (e.g., staking, lending, tokenized asset management), which Galaxy is actively positioning for through innovation and platform development, supporting long-term growth in recurring revenue and operating income.

Want to see why this narrative leans so heavily on future earnings power and margins? The fair value hinges on ambitious revenue growth, rising profitability and a very demanding future earnings multiple that few companies are modeled against.

Result: Fair Value of $39.42 (UNDERVALUED)

However, this hinges on execution, with heavy capital needs and reliance on a single major data center client, both capable of undermining the bullish earnings narrative.

Next Steps

With both bullish and cautious signals in play, it makes sense to move quickly, review the underlying data yourself, and pressure test the story from both angles, starting with these 2 key rewards and 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.