Quotes on shares of fintech company DeFi Technologies rose more than 3% on Tuesday, July 9. The gains followed the company’s announcement that it had agreed to acquire Stillman Digital, a platform for over-the-counter (OTC) trading in crypto assets and liquidity provider.
Details
DeFi Technologies stock climbed 3.25% to $1.27 per share in OTC trading on Tuesday. It is up more than 150% since the beginning of the year and 1,530% over the past 12 months.
On Tuesday, DeFi announced that it had signed a letter of intent to acquire two legal entities of Stillman Digital, a crypto OTC desk and liquidity provider. A liquidity provider is an intermediary that holds assets and, in exchange for a reward, supplies exchanges with crypto to fulfill orders.
About the deal and the participants
Stillman Digital was founded in 2021. Since then, it has facilitated more than $15 billion in trading volume, according to the DeFi Technologies press release. Its clients, as stated on the Stillman website, include individuals, digital asset miners, retailers, family offices, and hedge funds. Trades can be done through chat, phone, and Stillman’s interface. Revenue is generated by the spread between the client price and the eventual hedge price. In the first quarter of 2024, the company reported revenue of CAD8.35 million ($6.1 million).
DeFi Technologies expects the acquisition of Stillman to expand its trading capabilities, diversify its client base, and stabilize its revenue streams, it noted. Currently, DeFi operates several business lines through its subsidiaries. One of them, Valour, issues exchange-traded products (ETPs) that enable retail and institutional investors to access digital assets, such as Bitcoin, via their traditional bank accounts. As of May 31, Valour’s total assets under management (AUM) stood at CAD837 million (approximately $610 million), nearly 65% higher than a year earlier. Another DeFi unit, DeFi Alpha, aims to identify low-risk arbitrage opportunities within the crypto ecosystem. Crypto arbitrage entails exploiting price differences for digital assets across various markets or exchanges.
Additionally, Stillman plans to expand into new business segments, including custody and foreign exchange, which are expected to drive future growth, DeFi stated.
According to the agreement, DeFi Technologies will acquire Stillman’s securities in exchange for 2.5 million DeFi shares.
Analyst insights
In mid-May, Zacks Small Cap Research released a report on DeFi Technologies titled “Underappreciated Earnings Power,” suggesting that the company’s asset growth will depend on Bitcoin price dynamics: if the cryptocurrency reaches $100,000 per coin, the company’s stock is expected to exceed $7 per share.
