Q2 earnings spotlight puts Bullish in focus

Bullish (BLSH) is drawing attention ahead of its second quarter earnings report on August 13, one year after its stock market debut, with analysts watching how the crypto trading slump feeds into results.

Over the past year since listing, Bullish has swung from a strong debut to a weaker patch. The recent 7 day share price return of 3.03% contrasts with a much softer 90 day share price return that is down 41.35%. This suggests momentum has cooled despite the upcoming results.

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Bullish now trades well below the average analyst price target after a steep 90 day pullback. The spread between the recent US$24.52 price and valuation estimates is wide enough to raise the question of where fair value really sits.

Preferred Price-to-Sales multiple of 13.9x, is it justified for Bullish?

On the latest figures, Bullish is trading on a P/S of 13.9x, which sits well above several reference points and raises questions about how much growth the market is pricing in.

The P/S multiple compares the company’s market value to its revenue. For Bullish, a market capitalization of about $3.7b alongside revenue of $267.9m translates to that 13.9x figure. Investors often look at P/S for loss making companies like Bullish where earnings metrics are less useful.

According to Simply Wall St’s fair ratio workup, Bullish screens as expensive on this basis. The current P/S of 13.9x is described as high compared to an estimated fair P/S of 3.6x. It is also framed as expensive relative to the US Capital Markets industry average P/S of 3.4x and a peer group average of 4.1x. Those gaps are wide and point to a valuation that sits well above where the market could potentially gravitate if enthusiasm around Bullish’s growth profile cools.

Result: Price-to-Sales of 13.9x (OVERVALUED)

However, Bullish still faces clear risks if trading activity remains subdued or if the company’s US$1,002.4m net loss continues to put pressure on sentiment and valuation.

Next Steps

With sentiment around Bullish clearly mixed, this is a good time to move quickly and look through the data yourself before forming a view. To weigh both the potential rewards and the risks highlighted by recent results and market pricing, start with the 1 key reward and 1 important warning sign.

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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.