Dec 16, 2020
Voyage(r) to the Cosmos
Let’s play a game… I mean, for those that know, we are on a voyage and it’s not a short or quick trip. What’s growing 20% a month, up over 1,000% YTD, and rhymes with smorgasbord??? Ding, Ding, Ding!!! Voyager.
The publicly traded, crypto-asset broker for retail and institutional investors, has exploded into the atmosphere in 2020. With customer funded accounts growing 20% per month, assets under management increasing 37% per month, stock up over 1,100% YTD, and VGX, its native token, up over 900%, what’s not to like? Yet, this is just the beginning of Voyage(r) to the cosmos.
In the ever-expanding space to buy crypto assets, Voyager has certainly started to set itself apart. From Coinbase to Kraken, Cash App, PayPal, Blockfi, Binance, and on and on, it is hard to know the best place to enter the crypto ecosystem. Voyager is the only real prominent crypto broker in the space which allows the company to offer better products and more services to customers. It’s a big piece of the company’s expanding moat that already includes interest on over 22 coins, trading on 55 coins, and zero fees (more products set to launch in 2021). Top 5 reasons to use Voyager.
Voyage(r) to the Cosmos Series
This article is the first in a series breaking down all aspects of investing in Voyager. Everything from the metrics that matter and current performance to future projections and ultimately my stock and VGX predictions for 2021.
One advantage of Voyager is the ability for retail investors to participate in the broader crypto market growth. Those that believe the overall market cap of crypto will grow from $500B to 3–5 Trillion in the next few years should be taking a hard look at investing in Voyager. Of course, you should still own Bitcoin. It will likely go from $20k to $100k+ in this cycle. Voyager is a good addition to your portfolio as it gives you exposure to the number of users AND the asset price growth that will happen at a smaller market cap. This will create higher returns.
Metrics that Matter
There are 2 ways to invest in the growth and success of Voyager. Publicly traded stock (VYGVF) and its native coin (VGX). VYGVF gives investors traditional equity exposure to future cash flows on its assets. Higher the revenue and cash flow, the higher the returns. VGX allows investors to get exposure to the customer network growth and platform engagement. The more customers and trading/holding/spending on the platform, the higher the returns.
Assets under management (AUM) is most important to the stock because assets generate revenue. Trading and interest are the 2 biggest revenue drivers for the company. The more assets the higher potential for creating revenues. AUM grows through new customer funds, existing customers adding funds, compounding interest of existing funds, and asset price growth.
Customer funded accounts (CFAs) will be the most important metric for VGX. The company is a network of customers that want exposure to crypto assets and the advantages they provide. VGX powers the network by providing rewards and value for customer activity. The higher the growth rate of CFAs, the higher value for VGX. CFAs grow by refer a friend rewards, company marketing, and M&A.
Asset Activity is important to both stock and VGX holders. It’s a measure of engagement in the platform as customers trade coins or participate in other services. For stock holders, the more trading activity, the more revenue per asset held. For VGX holders, the more trading activity for rewards or interest boost, the more customers need/want to hold the coin. At the moment, the only public numbers for asset activity is principal value traded.
Dilution or increase in both stock shares and coin circulating supply. It’s important to remember that with any young, high-growth company, there is a constant need of cash to fund the growth. Voyager is no exception. If the dilution rate exceeds the growth rate, the lower the returns. Up to this point, Voyager has used stock issuance to fund product development and market acquisition. They are using increased coin supply to fund the rewards program and increase user growth.
Current Performance of Key Metrics
AUM has increased 37% per month in 2020 and now stands at over $165M in December. That’s a staggering 33x increase from December 2019.
Remember there are 4 components that factor into increasing AUM. New customer funds, existing customer adding funds, compounding interest on existing funds, and crypto asset grow. Most quarters, new funds (new and existing customers) growth is higher than asset price growth except the current quarter which I project to be ~70% of the AUM growth. These components really matter when we start to look at future projections.
With the increases across all 4 components in 2020, this has increased the average account balance 17% per month. A growing customer base and growing account balance explains the high growth rate of AUM in 2020.
We have also seen an acceleration in revenue per AUM in 2020. This highlights the growing number of customer products that are extracting more shareholder value.
Customer funded accounts grew on average 20% per month with a median increase of 8%. Voyager now have over 40k CFAs as of Dec 2020 and will likely end the month over 10% growth from November to December.
Asset Activity represented by principal trading value to AUM has mostly averaged between 0.80 and 1 for 2020. It was higher in late 2019 and early 2020 as Voyager was primarily a trading platform. It has come down with the introduction of interest on asset holding vs trading.
Dilution of outstanding shares has increased on averaged just over 3% per month or 48% YOY. The great news is customer growth has been much higher. The increase in shares were largely sold in private placements to long term holders. Equity prices have shrugged off this increase in supply given it is generating higher returns.
As you can see, all key metrics have been accelerating in 2020. This sets a solid base for a highly scalable business to climb even higher in 2021. For all current investors, it’s most important to educate and share about Voyagers value proposition to help grow its network. Hope this series can help bring more people into a community of financial freedom.
As a reminder, this is the first stage in a 3 part series. Part 2, Flight Path, dives into future projections of the key metrics and what they mean to the business over the next few years. We will conclude with my Voyager stock and VGX price predictions for 2021.
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.
