DeFi Technologies Inc is our next 10x candidate

Posted on August 28, 2024

What did we say?  Yes, DeFi Technologies Inc.  I know, I know, I know.  We rarely touch any OTCMKTS stocks but this is so interesting that we had to write about it as well as investing in them.

So who is DeFi Technologies ($DEFTF)?

DeFi Technologies is a technology company that allows traditional investors to identify and invest in a diversified portfolio of digital assets across the decentralized finance and Web3 sector. We capture the upside in the explosive growth of digital assets and the future of finance via regulated equity instruments. We are the only publicly traded company built to give investors direct exposure to these nascent markets.

Why are we interested?  Look at their most recent filings.  It’s either a fraud or there is something massive here.

  • Record Operating Revenues and Net Income: DeFi Technologies recorded its strongest quarter ever, achieving Total Revenues of C$133.2 million (approximately US$98.0 million) and C$128.2 million (approximately US$94.4 million) for the three and six months and Net Income of C$90.4 million (approximately US$66.5 million) and C$72.3 million (approximately US$53.2 million) for three and six months ended June 30, 2024.
  • Strategic Advancements and Product Launches: The quarter featured the launch of multiple Exchange Traded Products (“ETPs“) by subsidiary Valour Inc, and Valour Digital Securities Limited (together, “Valour“) significantly enhancing the company’s product offerings and market position.
  • Substantial Growth in Assets Under Management (AUM): AUM grew by 43.7% since December 31, 2023 to approximately C$730.1 million (US$533.4 million) as of June 30, 2024, driven by favorable market conditions, new product launches, and strategic corporate actions that enhanced trading volumes and overall financial performance. Since June 30, 2024, AUM has further increased to C$837 million (US$610 million) as of July 31, 2024.
  • 2024 Outlook: Looking ahead, DeFi Technologies projects its annualized revenues for fiscal 2024 to reach approximately C$179 million (US$131 million) for 2024, supported by ongoing AUM growth, upcoming ETP launches, and the integration of new acquisitions, which are poised to capitalize on the favorable conditions in the digital asset sector. Furthermore, we continue to evaluate additional Defi Alpha trading opportunities which, if executed, will drive revenues and net income higher.

Doesn’t that sound too good to be true?  Revenue of C$133.2 million (approximately US$98.0 million) with Net Income of C$90.4 million (approximately US$66.5 million).  I don’t even think $AAPL (Apple) has a profit margin that big!  And we are not even sure if this is sustainable and/or scalable.  All we know is that this is an extremely profitable company and if they can sustain/scale, this will be 10x or even 20x sometime soon.

But the funny thing is that their 2024Q1, they reported:  Record Operating Revenues and Net Income: DeFi Technologies recorded its strongest quarter ever, achieving Operating Revenues of C$13.4 million and Operating Net Income of C$5.3 million for Q1 2024.  That’s 18X jump in net income.  Are we the only one thinking this might be a typo?  Or did they become that much profitable?

Only time will tell.  But the stock is so cheap that we think it’s worth a risk to make a small bet.

We will be back with a deeper dive.  Stay tuned!