Now's Your Chance to Buy Bullish at Its IPO Price. Think Twice. — Barrons.com
By Ian SalisburyWhile shares of Bullish have been hit hard recently, the stock still resembles something closer to a casino chip than a buy-the-dip value play.Bullish, owner of the crypto trading and information site CoinDesk, was one of the year's hottest initial public offerings in August. Shares, which initially priced at $37, closed as $75 during their first week of trading.But after yo-yoing through September and early October, the stock has nosedived in recent weeks. It has closely followed the trajectory of Bitcoin, which was down 29% Thursday morning from the record high of $126,000 reached on Oct. 6. In the past 30 days, Bullish shares have fallen 35%, trading at $38, only a dollar above their IPO price, in late morning.To some, that looks like a major opportunity. On Wednesday, exchange-traded funds managed by ARK Invest, run by tech evangelist Cathie Wood, purchased 460,000 shares of Bullish, valued at around $16.9 million.At the same time, Citi Research analyst Peter Christiansen reiterated his Buy rating and $77 price target for the stock. That is significantly more aggressive than the average call on Wall Street, which is around $57.Christiansen cited better than expected third-quarter results. On Wednesday, Bullish reported $76.5 million in revenue, about 5% more than Citi had forecast.Even at $38, however, Bullish looks like a risky bet on the iffy-looking crypto markets. Baked into Christansen's price target is a bullish view on Bitcoin. He notes his valuation is based in part on Bullish's 22,600 Bitcoin tokens, whose value he pegs to Citi's 12-month rolling Bitcoin price forecast of $181,000.That is a big assumption.Bitcoin fell 0.8% on Thursday, to $89,700, even as the stock market staged a rally after Nvidia's big earnings report Wednesday evening. The divergence suggests it will take more than a general sense of optimism about tech for Bitcoin to regain its momentum.Meanwhile, the odds of a December interest-rate cut, potential positive news for Bitcoin, remain well below 50/50 despite a tepid jobs report Thursday. Lower interest rates tend to benefit cryptocurrencies because they make Treasury bonds comparatively less attractive. But a majority of traders are still betting on a higher-for-longer rate scenario.In short, there is no compelling reason to assume the past month's slide in Bitcoin will immediately reverse course. It isn't yet time to get bullish on Bullish.Write to Ian Salisbury at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.