Gemini stock price had a highly volatile first day as a publicly traded company. It initially popped to $45 after the much-anticipated Initial Public Offering (IPO) and then ended the day at $32. Here’s why this crash could be the start of a prolonged bear market.
Gemini Space Station faces major headwinds
Gemini, the crypto exchange launched by the Winklevoss Twins, launched its IPO on Friday, raising $425 million. It is now valued at over $3.4 billion, much lower than the peak valuation of over $7 billion a few years ago.
The company faces significant headwinds in the near term that may impact its long-term performance.
First, Gemini is primarily a crypto exchange that generates most of its revenue from the trading activity on its platform. This is a risky business as its revenue normally cools during bear markets.
The concentration of its subscription-based revenue explains why a company like Coinbase has boosted its focus on other solutions like stablecoins, custody, and subscriptions. It hopes that this division will start making more money than the transaction one in the long term.
Second, Gemini, despite its big name, is still a small name in the crypto industry. For example, data compiled by CoinMarketCap shows that the 24-hour volume in the spot market stood at just $94 million, much lower than other little-known companies like DeepCoin, Toolbit, and Pionex.
Third, Gemini’s financial statement showed that its business was not doing well. Its results showed that its revenue rose from $98 million in 2023 to $142 million in 2024 as its net loss improved to $158 million, down from $319 million a year earlier.
However, this year’s performance has not been good as its revenue dropped to $67 million in the first half of the year from the previous $73 million. The net loss rose sharply to $282 million. This weakness could persist, especially after Coinbase reported a weak financial report in July.
The other notable risk for Gemini is that the crypto exchange industry has become highly competitive in the past few years. For example, Robinhood has now become a major player in the crypto exchange industry, especially with the recent Bitstamp buyout. Bitstamp handled over $300 million in volume in the last 24 hours.
WeBull, the Chinese trading platform has introduced crypto to its platform, while companies like Binance and OKX have relaunched in the United States. All these companies have a superior competitive advantage than Gemini because of the coins they offer. Gemini has only 142 markets, while Binance has 2,120 and Bybit has 1,269.
Additionally, the other parts of Gemini’s business are relatively small. For example, Gemini Dollar, its stablecoin, only has a market capitalization of over $52 million, a tiny amount in an industry with billions of dollars in assets.
Most recent IPOs have plunged
The Gemini stock price is also at risk based on the performance of other recently launched initial public offerings (IPO). After the initial jump, most newly listed companies have crashed by double digits.
Circle stock price has plunged by 60% from the year-to-date high of $298, while Bullish is down by 58% from its post-listing high of $118.
Klarna, the leading BNPL company that went public last wee, has also plummeted by 24% from its highest level. CoreWeave stock price had dived by 40% from the year-to-date high.
Therefore, it is likely that the Gemini Space Station will also do the same and crash in the coming weeks as the post-listening momentum wanes.
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