Flight Path — Voyage(r) to the Cosmos
Welcome to the Flight Path — Voyager(r) to the cosmos. The voyage took flight in the first article in the series while looking at metrics that matter and current performance. We now set our sights on the path forward and yes, a smorgasbord awaits.
Assets under management (AUM) and customer funded accounts (CFAs) are critical metrics when investing in Voyager. Luckily, we have a great starting point from a recent investor presentation posted on Voyager’s website. It projected 1M CFAs and $20B in AUM by the end of 2025.
This equates to about ~5.5% per month growth for CFAs and ~8% per month growth for AUM. This annualizes at ~90% and ~152% respectively. Let’s visualize this guidance using monthly data.
Now, if you cross compare with current growth rates outlined in the first article, you will notice CFAs has been growing 20% per month (8% median) and AUMs has been 37%. Why is the company projecting a lower growth rate in the future when it has been aggressively building new products, acquiring new companies for market expansion, and signing on sports personalities? My thinking is they are being overly conservative. Nothing more. It’s important to lay out some more realistic scenarios to help guide the upcoming price prediction article.
As mentioned before, Voyager is a network effect business. Every new user (and asset for that matter) benefits all others around them creating an exponential value curve higher. The same applies to crypto assets. Almost all tech companies show a similar adoption path.
One of Voyager’s unique advantages is it is a network effect business enabling buying of network effect assets (Bitcoin, Ethereum, VGX, etc). CFAs will follow normal growth rates of tech companies, but AUMs will increase at a much higher rate because they are also being influenced by network effects.
Let’s use a 10% per month growth rate for customer funded accounts (CFAs) and a 20% per month growth rate assets under management (AUM) for the next 2 years and then reduce those growth rates by 50% in year 3. These are both roughly half of the current run rate today.
This would get Voyager to 1M CFAs by end of 2023 and $20B in AUM by 2022 (50B in 2023). This is an increase of average account size of 9% per month or increasing 10x in the next 3 years. The crypto market doing a 10x in the next 3 years is certainly possible and likely expected (not financial advice).
These projections won’t be exact, but show the business potential over the next 3 years as more people and more assets enter the crypto market. And let’s not forget that Voyager has a whole bunch of product and market expansion happening in 2021. Canada, New York, Europe, Debit Card, Credit Card, Crypto to Stock, Margin, etc. Given all of the work the company is doing, the crypto market catalysts, the great product, and the excellent leadership team, these projections might be low. Time will tell, but the potential is there and its much higher than today.
Setting the Stage for Price Prediction
It’s key to remember that customer funded account and asset under management projections are critical because price of both VYGVF (stock) and VGX (native token) as they are functions of each respectively. We know this because of network economics
For VYGVF, we use Metcalf’s Law to calculate the network effect value of each additional asset. Then corelate with the the stock price. There is a strong, non-linear relationship with a R2 of 82%. The trend over time gives the same visual.
For VGX, we do the same calculation and correlation except with funded accounts. This relationship doesn’t have as high of correlation (R2 69%) because utility also matters. Customers have to get value from holding and using the token. Currently, every additional AUM can be converted to revenue where not all users need to hold VGX to get value. The higher the value a customer gets from VGX, the stronger and more vertical the relationship. I call it token efficiency. How efficient is the token in converting user growth to value creation? More on this topic in the final article.
Voyager has huge potential over the next 3 years. It will take time and there will be bumps along the way. As I have said before, it’s most important to educate and share Voyager’s value proposition to help grow the network. A network for financial freedom.
As a reminder, this is the second stage in a 3 part series. The final article will provide Voyager stock and VGX price predictions for 2021 and beyond.
If you are not a current Voyager customer and would like to start investing in crypto with Voyager, download the app and trade $100 to get $25 of free Bitcoin. Use code AFK8SG or this link to claim your BTC
Disclosure: I am a current VGX token holder. This is not financial advice. This article is a factual analysis of publicly available data and my estimates and perspective of the data. Do your own research or seek out the professional advice from a financial advisor.