Stablecoin Payments And Tokenization Will Drive Significant Long Term Upside

Catalysts

About Exodus Movement

Exodus Movement builds a multichain self-custodial finance app that enables users to store, swap and increasingly spend digital assets worldwide.

What are the underlying business or industry changes driving this perspective?

• Rapid adoption of stablecoin based payments in high inflation markets such as Argentina and broader Latin America, combined with the Grateful acquisition and near term launches, positions Exodus to capture large payment flows and expand transaction based revenue over time.
• Scaling XO Swap through 16 signed industry partnerships, including MetaMask and other wallets, is driving swap volume growth and high margin white label revenues that may support continued expansion in overall revenue and operating leverage.
• Growing non exchange income streams such as Solana staking, XO Pay and future yield and lending products on stablecoin balances create diversified, recurring revenue that can affect net margins and smooth earnings across crypto cycles.
• Leadership in tokenization and on chain common stock trading, including the Exodus stock token on multiple blockchains and potential Bitcoin dividends, positions the company within an emerging market structure that can unlock new fee lines and influence long term earnings power.
• An asset light, debt free balance sheet with over $300 million in digital and liquid assets and rising Bitcoin holdings gives Exodus strategic flexibility to invest in product development and acquisitions, supporting top line growth while aiming to limit dilution and balance sheet risk.

Assumptions

This narrative explores a more optimistic perspective on Exodus Movement compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Exodus Movement's revenue will grow by 29.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 79.4% today to 10.8% in 3 years time.
• The bullish analysts expect earnings to reach $32.0 million (and earnings per share of $0.86) by about December 2028, down from $108.8 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $20.4 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 55.5x on those 2028 earnings, up from 4.2x today. This future PE is greater than the current PE for the US Software industry at 31.9x.
• The bullish analysts expect the number of shares outstanding to grow by 2.54% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.47%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Exodus remains structurally exposed to crypto asset price cycles because a large portion of revenue is driven by swap volumes and aggregation activity, so a prolonged downturn or stagnation in Bitcoin, Ethereum and broader digital asset prices could materially reduce transaction activity, slowing revenue growth and pressuring earnings.
• The strategy to scale stablecoin payments via Grateful in high inflation markets like Argentina and Uruguay depends on rapid user and merchant adoption, but regulatory shifts around stablecoins, capital controls or banking access in Latin America and other regions could limit payment volumes and reduce the long term revenue opportunity from payment fees and yield on stablecoin balances.
• Although Exodus is diversifying into non exchange revenue such as Solana staking, XO Pay and potential lending and mortgage style products, these lines are still early and may grow slower than expected or face competitive and regulatory headwinds, which could constrain the mix shift toward more recurring, higher quality income and keep net margins more volatile over time.
• The ambitious push into tokenization and on chain stock trading, including common stock tokens and potential Bitcoin dividends, depends on evolving securities regulation and market infrastructure that may take longer to materialize or be more restrictive than anticipated, limiting new fee pools and dampening the uplift in long term earnings power the narrative assumes.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Exodus Movement is $44.0, which represents up to two standard deviations above the consensus price target of $37.67. This valuation is based on what can be assumed as the expectations of Exodus Movement's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $44.0, and the most bearish reporting a price target of just $25.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $297.4 million, earnings will come to $32.0 million, and it would be trading on a PE ratio of 55.5x, assuming you use a discount rate of 8.5%.
  
• Given the current share price of $15.73, the analyst price target of $44.0 is 64.2% higher. Despite analysts expecting the underlying business to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.