One of the biggest trends of 2020 also is a trend that I suspect is likely to continue into 2021, and that is the stunning rise and growing acceptance of cryptocurrencies such as Bitcoin, suggests Jim Woods, growth stock expert and editor of Bullseye Stock Trader.
Now, I am a fan of Bitcoin in theory, as well as the blockchain digital technology that it operates on. Yet investing in actual Bitcoins or in a Bitcoin ETF can be extremely volatile. But I am a stock picker at heart, and that means I like to buy into companies that are benefitting from a specific trend.
Another way to put this is I like to buy the so-called “picks and shovels” plays, meaning that instead of investing in gold during the gold rush, I would have invested in the companies making and selling the picks and shovels used to dig for that gold.
In the cryptocurrency space, there aren’t many picks-and-shovels plays. However, there is one very good stock that fits that bill, and it is Voyager Digital Ltd. (VYGVF).
Voyager operates a digital platform that enables users to buy and sell digital assets (cryptocurrencies) across multiple exchanges in one account primarily in the United States and Canada. The company is considered an agency broker, which is basically a platform that is trying to get the best price on a security for their clients.
Other cryptocurrency exchanges want to fulfill a customer’s order on their platform, but Voyager will scan through a list of 10 to 12 exchanges looking to fill your order at the best price.
Interestingly, a lot of these exchanges are not available to the average North American retail trader, as most of the largest crypto exchanges are based in Asia and Europe and do not allow North America retail investors to trade on their exchanges.
In return for the better trade execution, Voyager gets paid, and they take a portion of that spread they have found on the purchase. On average, Voyager makes 65 basis points on each trade. This operation accounts for about 70% of the company’s revenue. The other 30% of revenue comes from security lending.
On January 5, the company announced that it expects Q4 2020 revenue to reach $3.5 million. That’s a 75% increase from the third quarter, and a whopping 3,877% from the fourth quarter of 2019.
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Voyager also said that its December revenue run rate was over $20 million, compared to $200,000 in December 2019 (run rate is estimated revenue extrapolated from available figures).
The company also said that its assets have continued to grow, increasing over three times from the September quarter to over $265 million in early January.
“As widespread adoption of cryptocurrency grew in the latter part of 2020, we have seen 2021 get off to a quick start and we are well-positioned to continue our extraordinary growth through 2021 and beyond,” said Stephen Ehrlich, co-founder and CEO of Voyager.
Ehrlich is a big player in the online/digital brokerage business, as he was a former executive at E*TRADE and at Lightspeed Financial. This is another thing to like about Voyager, as its executive team is filled with big hitters from the online brokerage, investment, and technology sectors.
Of course, the best thing about Voyager is the share price performance, which in 2020 was an incredible gain of 1,650%! This is the kind of big upside we can participate in with this cryptocurrency trading platform company — one that I consider the very best picks-and-shovels play on this exhilarating sector.