Summary Bullish faces further downside after its post-IPO drop, as current valuation remains difficult to justify amid weak fundamentals. I'm initiating BLSH at a sell rating, with far better opportunities that exist in the broader crypto sector. BLSH operates a smaller crypto exchange and CoinDesk, but struggles with limited coin offerings and lower trading volumes compared to major competitors. Key concerns include declining user engagement, trading volumes, and challenges in scaling up against larger, more trusted exchanges like Binance and Coinbase. 2025 has been a surprisingly active year for the IPO market, as many unicorns cashed in on sky-high stock valuations to test the waters as a public company. The typical pattern this year has been a strong Day 1 pop, followed by a slow burn down: that said, this doesn't mean that all these dips are worth buying. Bullish ( BLSH ), in my view, is a company that I think has further downside to go. The crypto exchange and services provider went public this year at $37 per share and promptly shot up to $68 on its first day of trading: but since then, shares of Bullish have dropped ~20% post-IPO, technically putting the stock in bear market territory. But given the fact that the stock is struggling to justify a rich valuation, I think there will be further trouble ahead for the company. Data by YCharts I'm initiating Bullish at a sell rating. In my view, there are far better crypto and crypto-related investments to make in the current market (I'm particularly bullish on CleanSpark ( CLSK ), a Bitcoin miner that is making use of its data center capacity to diversify its business into AI compute), while Bullish's metrics don't inspire much confidence. A Crypto Exchange And Data Platform First, let's get a good understanding of Bullish's business and how the company generates revenue. Bullish revenue streams (Bullish Q2 investor presentation) Bullish, as shown in the chart above, operates two key brands: Bullish and CoinDesk. At its heart, Bullish Exchange is a standard crypto exchange, and one that generates transactional revenue by taking a spread on trading volumes. The key growth driver here is, of course, volatility: the frequency with which Bullish users are making trades on the platform. We must emphasize that Bullish is a much smaller exchange platform than many of its rivals, which may give the company a hard time in attaining new clients and earning their trust, especially with new-to-crypto crowds who want the perceived stability of a larger name. According to CoinMarketCap, one of the leading sites for crypto prices and exchange data, Bullish only gives users the capability to trade 51 coins, with an average 24-hour trading volume of just $1.9 billion. Meanwhile, the largest exchange company by far is Binance, which offers 598 coins and has $19.9 billion in 24-hour trading volume. Coinbase (BASE), which offers 341 coins, is also among the better-known contenders, with $2.4 billion in trading volume. We note that while Coinbase's consumer trading volume is relatively small, Coinbase has begun gravitating toward institutional clients, which has enlarged its trading base. It's important to note that to date, Bullish has not yet generated trading revenue from the U.S., with all of its trading volumes coming from overseas markets, particularly Europe. The company recently received a license from New York State to offer digital asset spot trading and custody services, marking the beginning of its foray into the U.S. We note that hopes of positive contribution from the start of U.S. trading are one of the core supports that the stock is banking on. Describing the potential of the U.S. launch on the company's inaugural earnings call , CEO Thomas Farley noted as follows in late September: Finally, I'd like to discuss our U.S. launch. As I mentioned a moment ago, we have received the New York BitLicense. This was the last critical item for us to launch in the United States. So what's next? From an activation standpoint, our team has already been pounding the pavement, building a pipeline of interested exchange customers, including asset managers, hedge funds, retail brokers and more. In many instances, we can leverage our relationships with these very customers on the information services front to establish warm introductions and get them excited about the prospect of onboarding the Bullish. Our onboarding team and relationship managers have hit the ground running. We are also advantaged due to our global order book, a single global order book. Any U.S. client that onboards to our exchange will have access to our already existing global liquidity from day 1, meaning there is no 0 to 1 or cold start problem and meaning that U.S. customers will instantly benefit from our best-in-class liquidity in crypto's largest assets. It is worth noting that our targeted customer base is institutional. Institutional clients do take some time to fully onboard to the exchange and begin trading. We are optimistic about the opportunity in the United States, and we believe it could fast become our largest trading market." Bullish also operates liquidity services, partnering with the likes of Solana to support the stablecoin infrastructure and provide liquidity in the crypto markets. The company's other major business is CoinDesk, which the company acquired in late 2023 . Think of CoinDesk as the rough equivalent of CNBC or Bloomberg for the crypto markets, providing live price data and headline news. CoinDesk generates subscription revenue to provide advanced data for professional traders and crypto firms, while also generating ad revenue from consumer users who land on its website. Declining Viewership And Trading Volumes Now armed with context, we can dive into Bullish's problems. Take a look at the company's most recent trending metrics below: Bullish trended KPIs (Bullish Q2 investor presentation) As shown above, transaction revenue (earned from trading spreads) declined -43% sequentially and -31% y/y to just $24.1 million in Q2, which is the quarter ending in June. The outlook is potentially worse as we look ahead to Q3. Like many other exchanges, such as Robinhood ( HOOD ), Bullish reports user trading activity on a monthly basis, and even though we haven't received the official Q3 earnings release yet, we do have the results of spot trading volumes from July through September. Bullish monthly metrics (Bullish Q2 investor presentation) Total spot trading volume in Q3 totaled $130.4 billion, while total trading volume clocked in at $142.2 billion. The concerning aspect here, however, is that spot volumes have continued to weaken every month in Q3. September, in particular, saw a -19% month-on-month decline versus $44.3 billion in August, which in turn weakened -9% from July. Trading volumes were about ~2x higher, averaging ~$80 billion per month in Q1. Of course, bulls will chime in here and say this is all prior to getting any contribution from U.S. traders. I, however, am less hopeful. If Bullish's existing customers are already showing signs of less frequent/less volatile trading, there is little hope that U.S. traders will be showing meaningfully different trends. Moreover, Bullish is entering into a very competitive crypto exchange landscape in the U.S. American investors already have access to Binance, Coinbase, Robinhood, and a host of other exchanges: just because Bullish is launching doesn't mean there is any immediate appeal that will help the company win new traders onto its platform. Native access to CoinDesk and its non-trading revenue could be considered Bullish's key advantage and distinguishing factor. And yet here, the publicly reported statuses are also quite disappointing. In Q2, CoinDesk's unique page views fell -21% y/y to 26.4 million. Meanwhile, active monthly users fell to 2.9 million, a 0.1 million sequential loss of monthly actives from Q1, and a staggering -43% decline y/y. Needless to say, CoinDesk is already active in the U.S. market and has no exogenous tailwind to boost site visitation volumes. Amid visible sequential declines in both of Bullish's core businesses, we note that the company is absorbing higher public-company costs, with headcount rising 9% y/y to 406 full-time employees. Bullish opex (Bullish Q2 investor presentation) This caused Bullish's adjusted EBITDA to fall -45% y/y to $8.1 million in the most recent quarter, with margins of 14.2% falling 10 points y/y. We do note, however, that Bullish is expecting a bounce-back in adjusted EBITDA in Q3, guiding to a $25-$28 million adjusted EBITDA at a 36-37% margin range on the back of stronger expected subscription and services revenue. Bullish Q3 outlook (Bullish Q2 investor presentation) Valuation And Key Takeaways Despite worrying signals in both trading volumes as well as CoinDesk viewership, we find that Bullish still trades at rich valuation multiples. At current share prices near $55, Bullish trades at a market cap of $7.87 billion. Meanwhile, the company has a post-IPO net asset value (including cash as well as crypto holdings) of $3.65 billion, marked as of the mid-September earnings call using a BTC price of ~$116k (currently ~4% lower, at ~$111k at the time of writing). Bullish NAV (Bullish Q2 investor presentation) Netting off this NAV as-is gives Bullish an enterprise value of $4.22 billion. For FY26, Wall Street analysts are expecting Bullish to generate $351.7 million in revenue, or 33% y/y growth. If we aggressively assume the company can maintain a ~36% adjusted EBITDA margin on this revenue profile (or $126.6 million in adjusted EBITDA, with margins flat to the company's Q3 guidance), the stock still trades at a rich 33x EV/FY26 adjusted EBITDA multiple. Data by YCharts Of course, Bullish trades in a rather frothy market for crypto-related companies and crypto exchanges. That said, I wouldn't bet on a very small exchange being very successful in a U.S. market that is already dominated by big names. Steer clear here and invest elsewhere.
