Shares of DeFi Technologies (DEFTF) plunged this week after a popular crypto newsletter issued a negative report about the company. Though the stock gained 3,400% in the 12 months immediately before the selloff, one analyst remains bullish on it despite the price drop on Tuesday. It dropped as much as 44% from its Monday highs on the over-the-counter market, though it is still up 85% month-to-date.
“While DEFI's shares may have been due for a healthy pullback after their exceptionally strong recent rally, we view the extent of the sell-off as overdone, and we regard the stock's significant repricing as an attractive buying opportunity,” wrote investment bank Benchmark's senior research analyst Mark Palmer. He reiterated a “buy” rating on and CA$3.00 price target.
DeFi Technologies has two primary business lines. One is DeFi Ventures, which focuses on pre-seed to Series A backing of founders, projects and networks across decentralized finance and web3. The other is Valour Asset Management, which gives investors to gain exposure to digital assets and defi. Valour is an issuer of exchange-traded products (ETPs) tracking the performance of digital assets with listings on several European stock exchanges, including Euronext, Frankfurt Stock Exchange and Nordic Growth Market.
On Tuesday, CoinSnacks called into question the basis for DeFi's massive stock run over the past year.
“The problem for DeFi Technologies really is that their promotional IR blitz has worked out so well,” the newsletter said. “Between the influencer pumps, getting mentioned on CNBC, the email campaigns, and Pomp pomping, there is now strong evidence that the stock isn't rallying for the right reasons.”
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“Pomp” refers to Anthony Pompliano, who has been an advisor to DeFi Technologies since 2021. In January 2024, Pompliano's research firm, Reflexivity Research, was acquired in an all-stock deal by DeFi.
DeFi's stock lost almost half its value following the newsletter's publication and Benchmark noted that most of DeFi's ETPs are focused on altcoins, which have also sold off recently.
For its part, DeFi issued a release Wednesday and described the CoinSacks thesis as a “misleading short and distort” report, saying it “lacks merit and contains numerous defamatory, selective, inaccurate, incomplete and misleading statements, speculation, and innuendo.”
The Toronto-based DeFi publicly trades on Canada's CBOE and in the U.S. on the OTC markets. At publication time, its Canadian-listed shares traded at around $2.05, down 10% on the day, according to Yahoo Finance. Its OTC shares traded down a similar percentage to $1.48.