Exodus Movement (EXOD) Tokenized Stock: Is It a Good Buy?
Key Takeaways:
- Exodus Movement is a US-based company that developed Exodus Wallet, a versatile and user-friendly cryptocurrency wallet with in-app swap and staking options.
- They are one of the early pioneers of stock tokenization. Exodus stock was launched as a mini IPO on the Algorand platform in 2021.
- If it is scheduled to list on the NYSE in 2024, Exodus would have become the first publicly listed U.S. company with tokenized assets. However, due to SEC review, this was postponed indefinitely.
We believe tokenized stocks are the future of Wall Street.
Investors have already Think The same goes for us when it comes to cryptocurrency tokens, which are like stocks (learn more about our investment approach here). But for a company to create a token is a different matter. legally equivalent Owning stocks.
One of the pioneers of tokenized stocks is the Exodus Movement, which is fighting the SEC to issue a token (EXIT) with legally constituted stock ($EXOD) and list it on the NYSE.
This presents an exciting opportunity for both traditional and cryptocurrency investors. Because we believe this is a sign of things to come.
In this article, we will trace the history of the Exodus movement and take an in-depth look at its background and financial achievements. We will also evaluate the risks, challenges, and investment potential of $EXOD as a legally tokenized stock.
Overview of the Exodus Movement
Exodus Movement was founded in 2015 by JP Richardson, a blockchain coding expert, and Daniel Castagnoli, an interface designer who has participated in projects for major brands such as Apple and Disney.
Primarily a blockchain technology company, Exodus Movement’s main product is a cryptocurrency wallet designed to make cryptocurrency more accessible to new users..
Exodus Wallet is a software platform for storing thousands of digital assets across 50+ major blockchain networks. It is available as a browser plugin for PC, mobile app for iOS and Android, and desktop wallet for Windows, Mac, and Linux systems.
This self-managed wallet is a good choice for new users with its user-friendly interface, multi-network support, and in-app staking support. However, the convenience comes at the expense of some advanced features, making it less appealing to power users.
According to Coingecko, Exodus was the 9th most popular cryptocurrency “hot” wallet in the world, with total installs and just over 1 million users. The company earns revenue through fees on in-app token swaps and other transactions.
Exodus Tokenized Stock History
In 2021, the Exodus Movement announced its intention to launch a tokenized version of its shares on a blockchain network before listing them publicly on traditional exchanges. The company wanted to offer cryptocurrency enthusiasts and Exodus wallet users the first opportunity to become shareholders.
The digital token is named EXIT, with one token representing one share of Exodus Movement Class A common stock. EXIT was launched on the Algorand blockchain in June 2021. The company raised $75 million through the issuance of 2.73 million shares.
This entire process was facilitated by Securitize, a platform that helps companies raise capital from investors by issuing tokenized shares. Officially recognized by the SEC, Securitize focuses on transparency and compliance.
Following the initial success of the digital launch, EXIT shares began trading on the Securitize Markets platform in the first quarter of 2022. Investors from over 40 countries, including every U.S. state, can publicly trade EXIT tokens on the marketplace through a Securitize Markets account. At the same time, tokenized shares began trading on the OTC market under the $EXOD ticker (since the $EXIT ticker was already in use). To be clear, the current stock quote is $EXOD, but EXIT tokens still exist and can be converted to $EXOD on a 1:1 basis.
After achieving an initial selling price of $27, EXIT lost -94% in value (YTD) in Q4 2022 due to the industry-wide collapse.
Tokenized Stocks: The Future of Wall Street
Tokenized stocks are a digital representation of traditional asset ownership on the blockchain. Unlike most cryptocurrency tokens, these stocks are backed by real companies. Investors who own tokens also own an equal share of the company’s stock.
Here’s how stock tokenization works:
- The company will partner with a blockchain company specializing in stock tokenization. Securitize and Tzero are examples of such companies.
- A percentage of the company’s stock is placed in a special purpose company, corporate trust, or other entity.
- The company then issues tokenized securities with the help of its blockchain partner. Exodus launched the EXIT token on the Algorand blockchain.
- Typically, a single token represents one share of a company’s stock. Fractional shares may also be issued.
- Investors can purchase and trade these tokens on specific blockchain markets. Securitize Markets are a good example.
- Ownership of shares/tokens is recorded on the blockchain. Token holders can enjoy the same benefits as regular shareholders, including dividends and voting rights.
$EXOD stock in over-the-counter market
In 2023, Exodus Movement listed its Class A shares under the ticker $EXOD on the OTC market, one of the largest regulated over-the-counter securities markets in the United States. Initially, the stock traded on the OTCQB market before being upgraded to the more strictly regulated OTCQX market in April 2024.
Even though these OTC markets are regulated, they still don’t have nearly the confidence of major markets like the NYSE. Obtaining a NYSE listing would not only bring credibility to $EXOD, but also provide much greater liquidity and potential interest from institutional investors.
Listed in June 2023 at a par value of 0.000001, the value of $EXOD peaked at $20 in May 2024 in anticipation of its planned upgrade to the New York Stock Exchange (NYSE) on May 9. However, the listing was delayed due to the SEC’s decision to review the registration statement.
This is reflected in the value of $EXOD, which fell to $12 by mid-May 2024. But by the end of May, the price had recovered significantly to $17.58 per share, and investors were confident the SEC would approve $12. EXOD is listed on the NYSE.
Here’s a brief overview of the other basics:
- Market capitalization: $312.39 million
- Number of shares issued: 4,514,274
- Volatility: High (Beta 3.5, 5 years per month)
Exodus Movement Financial Performance
In the first quarter of 2024, Exodus announced its fiscal 2023 results, including the following key takeaways:
- total revenue: $56.2 million
- operating revenue: 8.4 million dollars
- net loss: $12.8 million
- Adjusted EBITDA: $17.6 million
Total revenue increased 11% compared to 2022. Adjusted revenue of $17.6 million represents a positive turnaround of 1,122% year-over-year. The number of active users (monthly) of Exodus Wallet also increased by 22%.
The company’s reported assets include $138.3 million, including $55 million in cash and cash equivalents (including USDC and Treasury bonds) and $80 million in cryptocurrencies (Bitcoin and Ethereum). The cash ratio is 7.29 and the current liquidity ratio is 18.94.
As mentioned earlier, Exodus Movement’s main source of revenue is transaction fees from the app/wallet platform. A 4% increase in exchange provider processor volume and a 22% increase in active users contributed to 2023 revenue.
The preliminary report for the first quarter of 2024 also showed a 118% increase in revenue compared to the first quarter of 2023, and a 6,920% increase in operating income over the same period. Net income increased by $54.8 million compared to $0.8 million in 2023.
Advantages of Stock Tokenization
Moving a company’s stock to the blockchain has several advantages and benefits for the company and its investors.
accessibility: Traditional investing is often limited to accredited investors. Moving stocks to the blockchain makes them more accessible to more investors, albeit with reasonable restrictions.
liquidity: Fractional ownership allows equity investments to be made available to an untapped pool of investors and can potentially increase liquidity for companies seeking to raise capital.
24/7 trading: Existing exchanges have fixed market operating hours. On the other hand, blockchain-based transactions do not have such time limitations and transactions can be made 24 hours a day anywhere in the world.
transparency: Blockchain is highly transparent and secure due to its persistent nature. Record keeping is not left to the control of any centralized authority.
Risks and Challenges
The main challenges to stock tokenization come from regulators. In the United States, the SEC has been actively pursuing cryptocurrency exchanges and high-profile blockchain projects for alleged violations of securities regulations.
A lack of regulatory clarity surrounding the impact of securities laws on blockchain operations has chilled widespread adoption of the technology. Regulatory clarity is needed before tokenization can be widely adopted by public companies.
The decision to postpone $EXOD’s NYSE listing was made at the last minute.
The US government’s stance on cryptocurrency assets has been shown to be overly cautious. Since 2023, the SEC and CFTC have been conducting extensive crackdowns on cryptocurrency businesses. On May 6, 2024, CFTC Chairman Rostin Behnam stated that additional regulatory actions for the cryptocurrency ecosystem will begin over the next two years.
In this regulatory environment, the SEC’s move to delay listings on the NYSE for companies with tokenized stocks does not seem strange. Exodus said it would wait for the SEC to provide a final response after a full review. The future prospects of $EXOD are difficult to predict. However, investors appear optimistic about the company’s future and its eventual NYSE listing.
Investor Implications
Investors can already buy and sell $EXOD on the OTC market. Like most other companies closely involved in the blockchain ecosystem, Exodus Movement’s stock price has been quite volatile. Increasing regulatory pressures may further complicate matters.
On the other hand, recent Exodus financial data indicates that blockchain businesses have rebounded strongly following the 2022 market crash. Since the wallet is more oriented towards cryptocurrency beginners, the company can grow as more users join the ecosystem.
For now, $EXOD has some potential. Unfortunately, the picture is clouded because plans to become a public company require a positive response from the SEC. Given the highly volatile regulatory environment, a wait-and-see approach may be better.
Subscribe to Bitcoin Market Journal for more great cryptocurrency investment ideas.
