Topic: Bitstamp investment opportunity at bnktothefuture? Unimpressive... - page 2. (Read 3228 times)

In 2015, Bitfinex had $9.349 MM in revenue, 2.322 MM in expenses, and net income of $7.027 MM; in 2016 through July, they had $8.017 MM in revenue, $2.000 MM in expenses and a net income of $6.017 MM, which was on track to be roughly $10 MM in income for the year. (It looks like I may have previously gotten the last year and YTD through July figures mixed up).

On a YoY basis, both revenue, and net income have grown by double digits from last year.

If a potential investor wanted to buy equity in Bitfinex, they could purchase BFX tokens at a discount, and convert those BFX tokens into Bitfinex (or the entity that is actually selling shares on Bnktothefuture), giving an effective valuation of closer to $100 MM. If an investor wanted to buy a large amount of shares, does not already own BFX tokens, then their buying of BFX tokens would likely push up their effective valuation because the price of the BFX tokens would likely increase.

Bitfinex could potentially increase their revenue/income by introducing new products, for example, I have heard them talking about offering deliverable options, and new trading pairs that generates high trading volumes.

In regards to your valuation estimate, an appropriate valuation is a conclusion that needs to be made by an investor considering to invest.

$6MM income, is that revenue or net profit?

Even assuming its net profit, $6MM on a $200MM valuation (the fact their debt tokens are selling cheaper than face value does not diminish the valuation they have put on it) is beyond obscene (3% yearly growth). They are already a market leader (there will be no quick growth from here on out), still huge risk of failure (regulatory, crippling debt, terrible 5 forces situation etc) on top of a management team that has proven itself to be incompetent. This is a very pricey investment for the amount of risk involved.

They should be looking a valuation closer to $50MM.

If you simply buy BTC then for you to profit, the price of BTC needs to increase. However it is possible that BTC will fall by the wayside and some altcoin will reach the level of success that many think BTC will have. If you buy shares in bitstamp (or any other exchange), then that exchange simply needs to allow for trading in that altcoin, and have heavy trading volume in that altcoin for it to be successful.

With Bitfinex's BFX tokens trading at 0.525, the valuation is closer to $100 MM

Bitfinex made over $6 MM in income last year, and $7 MM in income through July of this year.

I would not say that the valuation of Bitfinex is all that outrageous. The high level of debt the company has might be a concern though. 

they're only selling 2% of the company.. and their yearly reports are available for anyone to check (not freely but accessible)

So this is a sell off of shares of the bitstamp exchange? This is very odd of them to do. Is this a sign that they are failing just like BitFinex did earlier this year but they have enough sense to get away with some money before they run?

I did not know Bitstamp was selling shares

When i use a exchanger i'm worried for the time they got my funds in there control.
I cant imagine someone would trust bnktothefuture with there funds.

5% carry is not that bad at all, it actually looks like that is the only fee they charge investors. The issue is they are taking loads of seed stage companies and valuing them at Series A levels. The risk to reward is skewed, a company raising a Series A is further along, and possibly profitable, whereas seed stage companies are rarely profitable.

Just going through companies listed on their site (where equity is also listed):

Bitstamp is not worth $60MM valuation (there is something extremely off about a company that should have been profitable for the last couple years, that had a previous Series A round raising a round this small publicly (means they likely couldn't find a private buyer).

Bitfinex is not worth $200MM valuation. This is self explanatory.

I have never heard of Tallysticks, nor am I bothering to look up their traction data, but just going off looks this is more of what sites on bnktothefuture should be getting valued at. $5MM valuation is fair for a start-up with a little traction.

Airbitz: Not bad. Convertible note capped at 10MM is a fair offer for a company at their stage.

Not going to bother with their mining funds. Seems shady / ponzi, cloud mining is rarely ever legit, and mining is not profitable regardless.

BitPesa, prime example of a seed level company raising at a ridiculous valuation. Well over $25MM valuation when they have only handled 17k transactions (off their home page currently, they raised this cash a year ago meaning stats were even worse then)? Seriously?

ShapeShift: Lovely service (just like ChangeTip), like ChangeTip, not a big enough market. Small markets shouldn't be getting big bets on.

Uphold is hands down the most ridiculous one on their site. They reference $630MM in transaction volume at time of capital raise (over a year ago): Uphold charges 0 fees. Volume is irrelevant. They make their money out by investing user reserves in low risk, low yield bonds (primarily T-Bonds according to their site). The entire crypto-market is not that large. According to their site, they have $7.5MM in user funds. Yet they managed to raise capital at $130MM+. Anyone that invested in that will never get a return.

It seems a lot of their earliest companies were much more reasonable offerings.

i was looking through their FAQ and saw that they'll get 5% whenever an investor transfers their share in an investment before IPO

Nearly all of the bnkofthefuture projects are atrocious investments. Not surprised, almost everyone in the crypto space throws money at random projects with no clear path to monetization / justified valuation.


As far as Bitstamp's offering:

I find it extremely sketchy. They should be profitable by now, and should have been profitable for years. If not, they are doing many things wrong. If they aren't profitable on the amount of volume they are doing now, they are doomed. Bear in mind they also previously raised a $10MM round.

Something smells really bad about this. Just like how Bitfinex is allowing users to trade in their debt tokens at a $200MM valuation. Absurd.

My question is are the exchanges really making enough money to make it an expansionary business? If it does not expand a new competitor can come in and get its share of the pie because they are competing in a small market. The Bitstamp pitch could mean that they are in need of new money to continue operating. There is also the hack last year to account for. Getting hacked out of $5m is still affecting them, I am sure.

for those that are really interested, you can buy (19€) their latest yearly report at Luxembourg's Registry of Commerce and Enterprises (website in french or german only). It concerns the period 05/2015-05/2016.

That's an insane valuation. OP's calculation is also an overestimation of the potential profit, since he did not factor in costs (staff, insurance, compliance). Anybody buying shares at these prices has no investment skill. But that doesn't mean, the offering will be unsuccessful. I think it will be filled pretty fast, for these reasons:

1) some investors still can't invest in Bitcoin directly for various reasons or think it is too risky

2) other offers to invest in the Bitcoin sphere are even worse by the numbers

3) the offer is not an outright scam - the exchange is well established

The offer would only be justified, if Bitstamp would show significant growth in terms of turnover. That isn't the case. Bitstamp competes with a lot of other exchanges. So, yes, buying Bitcoin is by far the better investment.

ya.ya.yo!

I do believed that bitcoin price is going to go up very soon because of the way peopleqqqq are accepting it this day. From my area alot of free advertising is going on about bitcoin. Op this a very good news you have shared and for we that are involved in margin trade time to look for upward market movement trigger.

Not to mention that exchanges are tougher to manage than even casinos considering laws regarding money transmitting and currency exchange.

Many of the early exchanges have shut down. The licenses, fees, taxes, all eat up the profits.

I wouldn't put a penny into this nor should anyone else.

as the above points out there's zero possibility for profit and no crypto company will make a return for investors via conventional channels.

bit stamp doesn't innovate in any way and their corporate structure does nothing to reassure me.

ill help the OP out
E 1,191,870 is how much bitstamp is hoping 2% is worth.(their investment goal note measured in euro)
$ 1,187,366 is how much bitstamp is hoping 2% is worth.(their investment goal note measured in dollar)
lets call it a round figure of $E1.2mill for easy maths

meaning bitstamp think 100% (2%($E1.2m)*50) of the business is worth lets call it 60 million dollar/euro

now lets separately look at how much income that 60mill company gets
so $5m a day trading volume ($4.3m dollars today but lets round it up to match OP) with 0.1% fee...
($5m/1000)=$5000 a day income
multiply that for the year: $1,825,000
now that $1.8m yearly income is for 100% of the company.
so now you divide that 100% to 2% to know how much the share holder of 2% gets
the answer: $36,500

so shareholder buys 2% at $1,187,366 but gets only $36,500 returns a year
based on OP's calculations

---

now here is the better maths
https://bitcoincharts.com/markets/bitstampUSD_trades.html
$1,089,496,180.20 a year volume

what has to be known is the average trader is charged 0.2%
and when a trade happens the 'maker' is charged 0.2% and the 'taker' is charged 0.2%
so for each trade bitstamp gets 0.4%

$1,089,496,180.20/0.4% = $4,357,984.72 income for 100% of the company to share. which (imagining(dumbly) there are no costs to account for first)
again without caring about bills/salaries that eat into that $4.3m income
equals AT BEST 2% is $125,560

but that still does not cover the $1.2mill investment and would take 10 years to recoup even if that money was handed out BEFORE COSTS.
after costs expect ALOT less
because salaries do need to be paid.. bills need to be paid and in most investments, investors get their % AFTER profit is calculated. not income

---

oh and here is the real kicker
http://ukbizdb.com/company/08157033/bitstamp-limited/finances
its from 2013.. but read it and get some surprises

the company only has $18,800(£14,906) of its own assets (office/furniture/server/domainname)
but is valuing the company at $82,847,791 (£65,687,050)
its done this by using its customers funds as its own collateral!!! $81,813,497(£64,866,995) liability

---

based on the 2013 finances and knowing the income, etc.. i can see why they 'claimed a hack' in 2015
and they will claim another hack later too.

Thanks for the info.

I think the 0.2% avg fee is more appropriate than 0.1%. And shouldn't this be multiplied by x2? I thought both, buyer and seller, are charged in the same transaction.
Plus, they also have a bunch of other fees (withdrawals, bitstamp card transactions etc), which should be included in calculation, but no idea whether those are generating any significant income.

On the other hand, if that 2% is a share in the company, then also all the operating costs should be deducted (including office rental, staff costs, directors remuneration).

Personally, I wouldn't touch that with a 10 foot pole, at least not until they decide to file proper accounts. They are (again) way overdue in filing their 30 Oct 2015 accounts. Just as in previous years, Companies House threatened to strike off the company, likely due to not filing the accounts on time.
All available accounts are 'abbreviated', meaning they only show Balance Sheet, so no turnover/operating costs/profit are presented.

1191870 in USD is the amount that will give the investors 2% share. Airbitz looks better based on their #s, but those are some figures they come up with based on some projections.

I have said that with most of these bnkofthefuture projects,  even with the kimdotcom thing, i just bought more bitcoin which i can own and still benefit from any up in the price.  even with the maidsafe i just bought more maidsafe coin.