DeFi Technologies Inc.'s (DEFT:NASDAQ; DEFI:CBOE; R9B:FSE) Q1/25 adjusted earnings per share (EPS) was a miss, yet Zacks Small-Cap Research raised its target price on the fintech firm "on accelerating momentum across the franchise," Analyst Michael Kim reported in a May 14 research note.
"We continue to believe DeFi Technologies is uniquely positioned to capitalize on the burgeoning digital assets ecosystem, with a diversified and differentiated portfolio of asset management, trading, infrastructure, venture capital and research businesses," wrote Kim.
DeFi offers traditional investors exposure to various digital assets.
65% Uplift Possible
Zacks increased its target price on DeFi to $7 per share from $5, noted the analyst. This $2 boost reflects Zacks' higher earnings outlook for DeFi and a lower capital cost.
"We see further room to run, as awareness and appreciation of the company's unique business model, durable competitive advantages, considerable growth prospects and unsustainable valuation disconnect continue to build, particularly following the stock's recent uplisting to the NASDAQ," Kim wrote.
Compared to the $7 per share target, at the time of Kim's report, DeFi was trading at $4.25 per share. From this price, the return to target is 65%.
Higher-Than-Expected Expenses
On an adjusted basis, DeFi reported Q1/25 revenue of $7.6 million ($7.6M) and a net loss of $6.1M or $0.02 per share, "the miss largely a function of higher expenses," Kim noted. Core expenses were $13.2M, much higher than Zacks' $8.3M projection, due in large part to higher share-based payments.
The digital asset firm's assets under management (AUM) at Q1/25's end was $640,000 ($640M), below Zacks' $694M estimate.
Key Points From Q1/25
Kim presented the main takeaways from the first quarter's results:
Defined ETP Goal: DeFi subsidiary Valour has 65 ETPs listed and intends to reach 100 by year-end to meet growing demand in numerous regions. Its focus is on a single-asset, thematic basket and leveraged products.
"Assuming each new ETP brings in $20M of assets, [this] equates to about $750M of incremental AUM, or more than Valour's total AUM of $715M as of April 30," Kim wrote.
Strong Trading Pipeline: DeFi's arbitrage trading desk, DeFi Alpha, generated $22M from an arbitrage trade in early May and has a growing pipeline of similar prospective minimal-risk opportunities. Since DeFi Alpha was launched in Q2/24, it has brought in $119M. Also, Stillman Digital, DeFi's global trading technology and digital asset liquidity provider, recently announced an integration with Talos Trading Inc., an institutional digital asset trading company.
"The partnership enables Talos' global institutional client base to access Stillman's regulated/tailored liquidity solutions, thereby driving a step up in trading volumes and related fees," explained Kim.
Ongoing Market Expansion: DeFi continues to expand its geographical reach, with a current focus on Asia, the Middle East and Africa. Regarding the latter, the company recently partnered with the Nairobi Securities Exchange (NSE) to design and launch the Kenya Digital Exchange, slated to be fully operational by Q2/26. DeFi aims to list ETPs on the NSE before the end of Q3/25.
EPS Forecasts Boosted
Zacks raised its 2025 and 2026 EPS estimates on DeFi. For this year, it now is $0.39 per share, previously $0.33. For next year, the new EPS forecast is $0.48 per share, up from $0.45 before.
"Our revisions primarily reflect a steeper revenue growth trajectory, with our model now calling for total revenues of $203.8M for 2025," Kim noted. This is consistent with DeFi's revised 2025 revenue guidance of $201M, previously $160M.
Stock Specifics
At the time of Kim's report, DeFi had 326 million shares outstanding. Its market cap was $1.4 billion. Its 52-week range was $1.50–4.95 per share.
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