Financial Performance Highlights
Bullish reported a significant turnaround in its third-quarter financial performance, posting $18.5 million in net income. This marks a substantial improvement from a $67.3 million loss recorded during the same period in the previous year. The crypto exchange attributed this positive shift to record revenue, which was bolstered by a surge in institutional activity following its U.S. spot market launch and the successful introduction of its new options desk, which achieved over $1 billion in volume.
Adjusted revenue saw a notable year-over-year increase of 72%, reaching $76.5 million. Similarly, adjusted EBITDA grew to $28.6 million, up from $7.7 million in the prior year. The company also achieved positive adjusted net income, totaling $13.8 million. However, adjusted transaction revenue experienced a slight dip to $26.7 million, down from $32.9 million, a change attributed to softer trading volumes.
Stock Performance and Market Context
Despite the robust quarterly results, Bullish shares (BLSH) experienced a decline of over 6% in early Wednesday trading. The stock has continued a downward trend over the past month, losing nearly 40% of its value and retracing most of the gains achieved since its debut on the New York Stock Exchange in August. Bullish initially launched on the NYSE on August 13th at a price of $37 per share, subsequently soaring to an intraday high of $188, representing a 218% increase. However, the stock has since relinquished its early momentum and is currently trading near $35, reflecting a broader market weakness affecting publicly traded cryptocurrency companies.
Analyst Outlook and Operational Insights
Analysts at Cantor Fitzgerald have maintained their "overweight" rating on BLSH, although they have lowered their price target to $56 from $59. This adjustment is based on a revised target multiple for peer companies and does not reflect concerns regarding Bullish's operational performance or growth prospects. Matt Sigel, Head of Digital Asset Research at VanEck, observed that non-trading revenue remained relatively stable. He also noted that October perpetual futures spreads turned negative, indicating that the perps product incurred losses during a volatile month, despite continued strong performance in options trading.
Strategic Partnerships and Asset Growth
During the third quarter, the exchange established a strategic partnership with Deutsche Bank. Furthermore, Bullish was involved in five out of six new exchange-traded product launches in the United States. The company's options business surpassed $1 billion in volume within its launch quarter. Assets under management tied to Bullish's indices saw an increase, growing to $49 billion from $41 billion in the preceding quarter.
Institutional Investment Activity
Cathie Wood's Ark Invest disclosed on Monday that it had made net new purchases of Bullish shares totaling $10.2 million across three of its exchange-traded funds. This investment occurred as BLSH traded near its record lows, suggesting that Ark Invest perceives value in the stock at its current price levels, notwithstanding the recent market weakness.