Voyager Digital (TSE: VOYG) (VYGVF) develops and commercializes a digital platform that focuses on enabling users to Buy and Sell digital assets, such as cryptocurrencies.
The company has been going through a very difficult time following the fall of the cryptocurrency market. It was facing liquidity issues after one of its clients, crypto hedge fund Three Arrows Capital, defaulted on a loan worth over $650 million (at current bitcoin price levels). Specifically, the loan comprised 15,250 bitcoins (BTC-USD) and $350 million USDC.
Indeed, crypto billionaire Sam Bankman-Fried, who has become the crypto world’s lender of last resort, had to bail out Voyager Digital. Through his trading firm Alameda Research, the company was given a revolving credit line of 15,000 BTC and $200 million cash/USDC to continue operating.
Unfortunately, it doesn’t appear to be enough, as Voyager Digital announced that it suspended deposits, trading, withdrawals, and loyalty rewards. The company claims that the pause will help allow it to pursue the money owed by Three Arrows Capital.
However, there are multiple lenders that are trying to recover money from the hedge fund, meaning that Voyager is unlikely to recover the full amount.
The stock is down 31% so far today as a result of the suspensions. Investors that have held onto the stock since the beginning of the year are now down about 98% year-to-date.
Wall Street’s Take
Turning to Wall Street, Voyager Digital has a Moderate Buy consensus rating based on two Buys, fours Holds, and zero Sells assigned in the past three months. The average Voyager Digital price target of C$8.61 implies 2,094% upside potential.
Final Thoughts: A Lack of Positive Catalysts
The stock continues to get hammered as the crypto meltdown continues to impact companies throughout the sector. Indeed, those holding the stock for the past seven months have seen a 98% drawdown, and the suspension of operations will likely only hurt the share price even more.
Nevertheless, analysts currently have a positive outlook on the company. However, despite the positivity from analysts, there doesn’t appear to be a catalyst that would push the price higher. As a result, analysts may be overly optimistic at the moment.
