Stock Analysis & Ideas

Time to Bail Out of Voyager Digital Stock, Says Analyst

Every day seems to offer more turmoil in the crypto space and now crypto hedge fund Three Arrows Capital’s (3AC) troubles have spilled further afield.

On Wednesday, shares of Voyager Digital (VYGVF) nosedived by 53% after the crypto platform revealed the extent of its exposure to 3AC – around $660 million in loans apparently. Voyager said it might issue a notice of default to Three Arrows due to its inability to repay a loan, after it came to the fore that over the past week the hedge fund has failed to meet margin calls while staring down liquidity issues. Voyager is exposed to the tune of 15,250 Bitcoin and $350 million of stablecoin USDC.

The company stated that it had initially told 3AC to repay $25 million in USDC by June 24, following which it asked for the full amount of USDC and bitcoin it had loaned the fund to be paid back by June 27. The company has said neither of the amounts had been repaid so far.

Meanwhile, Voyager also disclosed that it had reached a definitive agreement with Alameda Ventures – on revolving credit facilities worth over US$500 million. According to the agreement, Voyager will be able to access a US$200 million cash and USDC stablecoin revolver and a 15,000-bitcoin revolver.

Following the update, BTIG analyst Mark Palmer asked the company about the “extent to which the company’s loan exposure is collateralized and whether it had hedges or other risk management tools against the exposure in place.” However, he was told to read up on the public comments made by the company.

“In the absence of this critical information,” Palmer said, “our ability to assess the situation and to value the stock is limited. As such, we are downgrading our recommendation, removing our price target and moving to the sidelines.”

As such, Palmer’s Buy rating now turns into a Neutral. (To watch Palmer’s track record, click here)

3 other analysts take their place on the sidelines next to Palmer, yet with the addition of 2 Buys, the consensus view is that this stock is a Moderate Buy. Wednesday’s shares price meltdown means VYGVF shares have toned down by an incredible 95% year-to-date. That said, the analysts are anticipating a meaningful comeback; going by the $6.65 average target. (See Voyager Digital stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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