On Tuesday, Galaxy Digital disclosed its second consecutive quarterly loss, underscoring the ongoing pressure from sluggish crypto market conditions. The firm reported a first-quarter net loss of $216 million, or $0.49 per share, marking an improvement compared to last year’s deficit of $295 million. Analysts had anticipated a larger loss per share of $0.93 for the period ending March 31, as noted by Yahoo Finance.
Despite these challenges, Galaxy Digital’s losses have been narrowing. The firm experienced a net loss of $482 million, or $1.08 per share, last year due to Bitcoin’s decline from its peak. However, it continues to attribute its financial setbacks primarily to falling digital asset prices.
Galaxy Digital’s stock saw minimal changes on Tuesday, trading around $25 after the opening bell. Although the stock reached an 11-month low of $16.43 recently, shares have risen by 12% since the beginning of the year for the New York City-based company.
The firm’s total assets declined by 12% from one quarter to the next, dropping to $9.99 billion from $11.3 billion, largely due to a $316 million decrease in its digital asset investments and related holdings.
CEO Mike Novogratz acknowledged that falling crypto prices affected the balance sheet but noted that reduced headcount and increased exposure to Hyperliquid’s native token helped mitigate losses. “We’ve been a supporter because it has an economic model, unlike many association tokens,” he stated, highlighting its significance for the future of crypto.
As of March 31, Galaxy Digital’s treasury contained $134 million in ‘Other Token Exposure,’ while its exposure to Bitcoin, Ethereum, and Solana was $431 million, $61 million, and $42 million respectively. Additionally, it had $95 million invested elsewhere.
Hyperliquid, a decentralized exchange focused on perpetual futures, supports its native token through a buyback-and-burn mechanism aimed at enhancing scarcity. The token’s value has surged 56% year-to-date, reaching $39.73 according to CoinGecko.
Galaxy Digital reported that digital assets contributed a first-quarter gross profit of $49 million, slightly down from the previous quarter’s $51 million. It attributed this performance stability to scaling recurring fee revenue and transaction income in a recent announcement.
Positioning itself as a connector between Wall Street and crypto markets, Galaxy traditionally offers trading, lending, and derivative services for institutions but has recently launched a retail platform, GalaxyOne, while managing its own data center.
The company anticipates profits from these data centers to increase this year with the delivery of its first data hall to CoreWeave, an AI-native cloud provider. During the earnings call, Novogratz emphasized the potential of diversification, expressing optimism about riding the wave of the ongoing AI revolution.