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Galaxy Digital stock attracted buying interest on Oct. 27 after the company reported improved third-quarter earnings. The firm also announced another $200 million share buyback as its data center operations expanded.
Galaxy reported $323 million in net income, reversing an $85 million second-quarter loss. However, the stock remained under pressure following its broader decline from earlier highs.
Galaxy Digital Stock Jumps After Strong Earnings
Galaxy a top company in the artificial intelligence (AI) and crypto industries, did well in the third quarter as Bitcoin and other altcoins rose. Its results showed that the company’s assets jumped by 51% in the quarter to $16.4 billion, while its net digital assets and investments rose by 48% to $1.7 billion.
As a result, the company’s gross revenue jumped to $8.7 billion, with the gross profit of its digital assets rising to $71 million. In total, net income surged to over $321 million, a significant increase from the $85 million loss it reported in the second quarter of this year.
In the statement, the company said its digital asset trading volume rose 12% in Q3, aided by the overall rebound in the crypto market. Its volume was, nonetheless, better than the overall spot market.
In addition, the average loan book size soared by 27% to $1.8 billion, aided by the Galaxy Onchain Financing Rate.
Another metric shows that the company’s assets under management (AUM) rose by 46% to $10.4 billion. This jump was driven by the rally in the crypto market, as the value of its assets jumped.
Galaxy is Exposed to the AI Data Center Business
Like other top crypto companies, Galaxy Digital has entered the artificial intelligence industry. Its approach, however, differs from that of other companies working to develop and operate data centers.
In contrast, its business is building data centers, known as Helios, and then leasing the space to other companies in the industry. Its biggest client is CoreWeave, has already started using its Helios 1 project. It is now in advanced stages of building the Helios 2 and 3 projects.
Galaxy’s data center business generated a gross profit of $79 million and an adjusted EBITDA of $69 million. The company is now in talks with tenants who will use its additional 830 MW of approved capacity.
It is against this backdrop that the company continued repurchasing its shares. It repurchased 9.8 million shares this year, and the board has approved an additional $200 million in repurchases. Its goal is to reduce the number of outstanding shares and boost its earnings per share.
Still, the company faces some potential risks. For example, the company’s crypto assets may come under pressure if Bitcoin and other crypto prices drop. Bitcoin has already dropped to $80,000 from the September high of $87,300. Ethereum price has also slumped in the past few weeks. This is important because the company ended the quarter with BTC tokens worth $538 million and Ether valued at $128 million.
Galaxy Stock Price Technical Analysis
The daily chart shows that the GLXY stock has slumped in the past few months. It bottomed at $14.14 this month and then bounced back to $16.67 after its earnings report.
Still, despite all this, the stock remains much lower than the 50-day and 100-day moving averages. It has slumped below the Supertrend indicator, a highly bearish view. Therefore, the stock will likely resume the downward trend and possibly hit the key support of $14.14. A move below that level will point to more downside.
This article provides information, not financial advice. Stock and cryptocurrency investments carry substantial volatility and potential losses. Readers should conduct independent research before investing.
