Assessing the Valuation Gap at DeFi Technologies

The recent annual letter from DeFi Technologies has placed a spotlight on the stark divergence between the company's operational performance and its market valuation. Despite presenting robust financial figures for 2025, the company's share price remains under significant pressure, trading far below its previous highs. This raises a critical question for investors: is the management's claim of a substantial undervaluation justified?

For the first nine months of 2025, DeFi Technologies reported revenue of approximately $80 million and an operating profit of $39 million, demonstrating profitable operations. The company's balance sheet appears particularly strong, highlighted by the following key positions as of the end of the third quarter:

• Cash and Treasury Assets: $165.7 million
• Venture Investments: $44 million
• Financial Liabilities: $0 (a debt-free balance sheet)

With a current market capitalization of about $285.8 million, CEO Johan Wattenström presented a calculation that underscores the perceived disconnect. After subtracting the company's cash and liquid investments, the market is implicitly valuing the core operational business—including its subsidiary Valour—at only around $76.1 million. Management contends this implied valuation is inconsistent with the firm's growth trajectory and earning power.

This argument unfolds against a challenging backdrop for the stock. Shares recently traded near $0.74, a stark decline from a yearly high of approximately $4.25. A nearly 10% drop in a recent session further emphasizes the nervous sentiment surrounding the equity.

Strategic Expansion Amid External Challenges

Operationally, DeFi Technologies points to clear progress in 2025. Its subsidiary Valour has expanded its suite of exchange-traded products (ETPs) to 102, strengthening its position as a regulated provider of crypto and digital asset products. The strategic roadmap focuses on several key areas:

• Geographic Growth: New listings on the London Stock Exchange, SIX Swiss Exchange, and Brazil's B3 exchange signal a shift from a primarily European focus to ambitions of becoming a global asset manager.
• New Revenue Streams: The planned 2026 launch of "Valour Custody" aims to commercialize the firm's internal infrastructure for external clients, creating a new business line for custody services.
• Institutional Focus: A continued expansion of institutional products and services within the decentralized market infrastructure space.

However, external factors are weighing on market perception. The law firm Burwick Law is examining potential claims related to the share price decline from around $4.25 to $0.74. This legal scrutiny is likely contributing to heightened volatility and is cited as a reason management is intensifying its dialogue with shareholders.

Should investors sell immediately? Or is it worth buying DeFi Technologies?

Navigating a Difficult Sector Landscape

The gap between solid fundamentals and weak share price performance reflects a tough year-end environment for crypto-related equities in 2025. Many investors remain cautious toward the sector despite new product launches and evolving regulation.

The company notes that its business model has evolved beyond simple Bitcoin trackers to include more complex structures, such as recently approved Solana ETPs in Brazil. Furthermore, with its reported $39 million operating profit, DeFi Technologies distinguishes itself from many loss-making peers in the blockchain space.

The CEO's explicit focus on valuation serves as a classic signal to the capital markets. It aims to reinforce confidence in the balance sheet and earnings base, potentially laying the groundwork for future strategic moves—such as acquisitions or other capital deployments—funded from its substantial cash reserves.

Priorities for the Coming Year

Looking ahead to 2026, DeFi Technologies plans to significantly grow its assets under management (AUM) and expand its distribution footprint, particularly in Latin America, Africa, and the Middle East. The launch of Valour Custody will be a key test of the company's ability to diversify its revenue base beyond traditional asset management fees.

From an operational standpoint, the upcoming release of the audited financial statements for full-year 2025 will be crucial. These results are expected to confirm the fourth-quarter performance and the sustainability of the reported operating profit. Technically, the stock remains in a downtrend; a sustained move above the $1.00 level would be viewed as an important step toward breaking the current negative momentum.