Galaxy Stock Slides 19% on ~$125 Million Bought Deal Public Offering Announcement

Fresh off Q4 earnings that reported a huge swing to profitability, Galaxy Digital (TSX:GLXY) is looking to shore up cash.

Today, Galaxy entered into an agreement with Canaccord Genuity Corp. to purchase 12,100,000 ordinary shares of Galaxy at a price of C$14.00 (~$10.31).

The deal also grants Canaccord Genuity Corp. the option to purchase an additional 1,815,000 ordinary shares at the offering price.

Before the announcement, Galaxy shares were trading at C$16.05 before falling more than 19% to C$13.00.

Our Thoughts

Galaxy doesn’t necessarily need the cash, as the company had more than $316 million in cash & equivalents and $1.08 billion in digital assets on the balance sheet as of December 31, 2023.

This after the company just announced a $100 million venture fund for early stage crypto as well as a participation in crypto VC firm 1kx’s latest $75 million fund.

So what does Galaxy need the money for?

We’ve previously written about how Galaxy CEO Mike Novogratz may be gearing up for another acquisition, but as of today we just don’t know.

A Tale of Two Companies

Since going public in 2018, we have been promoting Galaxy as a backdoor way to play crypto.

And while in that time you would be up more than 600% on your investment, the road to get there has been volatile with some major swings in price.

Huge venture funds, a failed billion dollar BitGo acquisition, stablecoins, an ETF launch, and who could forget the infamous LUNA tattoo. The company has been busy.

As we have said multiple times in this rag, although Galaxy should be a very smart investment in the long run, in the short run the company has been not only difficult to value for investors, but doesn’t really seem to care to explain itself. Yesterday’s deal with Canaccord is no exception.

Compare that to a company like Coinbase, which is doing everything it can to court investors.

And it shows. While Coinbase is up more than 600% over the past 24 months, Galaxy is up only 245%.