Possibly some free alpha for my NOSTR freaks in our goon cave.
Fold App (FLD - Fold Holdings) with 1485 Bitcoin ($125mil) in its treasury trading at $2.69, market cap $126 mil…
Trying to work out this valuation, assets minus liabilities minus a % on cash burn rate?
I can’t use Fold as a non-US based person, is it a good user experience?
59000 people in the credit card waiting list. Assume average APR of credit card of 21.47%, average of 47% of credit card holders have a carry over balance, average carry over balance is $6580. Potentially approx $39 mil a year ($3.3 mil a month) in interest payments to collect from Fold’s current waiting list.
Fold spends ~$360K a month cash burn.
Fold cost of capital is reported as “around industry average”, 8.74%, rounding up to 9%. Fold would be paying ($6580 x 0.09) x (59000 x 0.47), $16.4 mil a year, $1.3 mil a month for this credit.
Looking at ~$2 mil a month in free cash flow before additional costs and losses around providing credit (no idea what to deduct here).
Cash burn rate goes from -$360K a month, to $1.64 mil.
Long term, assume some Bitcoin purchasing into treasury once profitable of like 10% of profits, accruing $160K BTC a month.
Bitcoin Yield (%) = ((BTC per share at end of period / BTC per share at start of period) - 1) Ă— 100
Modelling out 2 years from credit card launch, assume BTC average price of $100K (insert your optimistic BTC price here)
$160K / $100K x 24months = 38.4 BTC
50mil shares (approx fully diluted)) , assume no capital raises via equity.
((((1485 BTC + 38.4 BTC)/50 mil)
(1485 BTC /50mil)))-1)*100 = ~2.6% BTC yield.
2.6% BTC yield just on re-invested profits, plus assumed BTC in treasury price appreciation.
Assume some credit rating increase, ability to issue convertible bonds to buy BTC etc.
Essentially, $20mil a year in profit, 50 mil shares gives a DCF enterprise value of $480mil, add in 1485 BTC to enterprise value, $580 mil total. Gives a share price of $11.71.
Assume my analysis is full of holes (bitcoiners don’t carry a card balance maybe?), but I see the path forward. Pretty bullish at current price, unless credit card product gets denied.