Mike Novogratz's Galaxy Digital Plummets in Stock Market Debut

Francisco Memoria
  • Shares of Mike Novogratz' crypto bank, Galaxy Digital, plummeted on their first day trading in Toronto's TSX Venture Exchange.
  • According ot Yahoo data, these fell by nearly 30% before recovering on the opening bell.

Mike Novogratz’s cryptocurrency and blockchain-focused merchant bank Galaxiy Digital has plummeted on its first day trading on Toronto’s TSX Venture Exchange, after falling close to 30%.

According to Yahoo! Finance data Galaxy Digital’s shares, trading under the GLXY ticker, fell from their opening price of CA $2.75 to a low of CA $1.98 before recovering to CA $2.31, meaning they lost 28% of their value in one day.

Novogratz, a former Goldman Sachs macro trader, launched the company back in November, one month before bitcoin, the flagship cryptocurrency, hit its all-time high near $20,000. Since them, it plummeted to under $6,000, before recovering to $7,520.

As covered, the crypto merchant bank reported a loss of $134 million in the first quarter of this year, in its first-ever financial disclosure. The firm, based in Manhattan, reported a net loss of $103.3 million on trading, with $13.5 million being on cryptocurrencies and $86.5 million worth of unrealized losses.

According to CNBC, Canadian regulators stopped the firm from trading on the TSX Venture Exchange sooner as they blocked its listing for eight months. During that time, most cryptocurrencies saw their value plummet, affecting Galaxy Digital.

Seemingly being unaffected by the quarter’s results, Novogratz revealed he’s looking forward for the future, as he revealed he’s proud of the progress the firm made, adding that it “assembled a world-class team with deep institutional knowledge and expertise and have also made significant strides in scaling our four core business lines.”

Despite its performance, the billionaire investor noted he believes going public was still the right move while speaking in a BNN Bloomberg Television interview. He said:

If I knew what I know now, knew the crypto markets were going to swoon as much, and it was going to take so long, I might have stayed private for another year or so and then gone public. But I don't think it's a mistake.

Mike Novogratz

Per various reports, the former Goldman Sachs trader expects Galaxy Digital to one day be “globally traded” in Hong Kong, London, and Frankfurt.

A Well-Known Bitcoin Bull

Novogratz is notably a well-known bitcoin bull. He as in the past told CNBC that bitcoin could “easily” hit $40,000 by the end of this year, and guessed ethereum, the second-biggest cryptocurrency by market cap, could hit $1,500.

Giving a keynote speech at Blockchain Week Korea, the billionaire investor explained why he remains bullish on cryptocurrencies like bitcoin. Per his words, a “herd of institutional investors” is coming towards the crypto ecosystem. These are "slowly coming to the realization that blockchain will be internet or Web 3.0."

Overstock CEO Sells Shares in His Company to Invest in Blockchain Projects

Patrick Byrne, the chief executive officer of Overstock.com (OSTK), has recently lashed out at investors who questioned his sale of 900,000 of his ‘founders shares’ in the company. Justifying his move, he revealed he needed the funds to invest in blockchain projects.

According to Business Insider, Byrne recently sent a letter to shareholders after the company’s stock prices plunged over 21% this week to their lowest since 2012, after he revealed he sold 500,000 of his shares earlier this week.

On Friday, the CEO revealed he sold an additional 400,000 shares, meaning he sold over 15% of his stake in the company. Although Overstock’s shares recovered on Friday, May 17, Byrne’s letter to shareholders was notable. In it, he wrote:

I simply had to supplement my nominal salary with stock sales in order to fulfill personal commitments to invest personally in blockchain projects such as Medici Land Governance, along with a need to meet charitable pledges.

The CEO added that he doesn’t plan on giving such an explanation again, justifying that he owes shareholders “staying within the law and not making decisions based on inside information, not explanations of my life and projects outside Overstock.”

He noted that the “unanticipated stir” caused by his sale was unexpected, and added “I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life.”

Byrne is notably Overstock’s largest shareholder, and noted he told investors a year ago he would be making “significant sales” to fund different projects, including those related to blockchain technologies and, presumably, cryptocurrencies.

In fact, the libertarian sold 775,000 of his shares in September of last year, before this week’s sale. The stock’s price has fallen roughly 90% from its record high in January of 2018, when Overstock was benefitting from its cryptocurrency ventures and accompanying the cryptocurrency market’s performance.

In November of last year, Byrne revealed he had plans to sell Overstock’s retail business and go “all-in” on cryptocurrencies and blockchain technology. The CEO’s plan would see the company focus on its fully-owned subsidiary Medici Ventures, which has been invested in blockchain-related startups, after selling its retail business.

Overstock's price performance over the last two yearsSource: Yahoo Finance

Byrne has notably been battling short sellers targeting Overstock, as the firm competes with the likes of eBay and Amazon. Financial analytics firm S3 Partners has estimated short bets against it stand at $157 million, or 50% of its float. This makes it more targeted by short sellers than 99% of companies in the U.S.

Despite the company’s performance on exchanges, Overstock has since launched its tZERO security trading platform, and was one of the first companies to pay a “portion” of its taxes using bitcoin in Ohio.