Winklevoss brothers' Gemini logs $159.5 million loss in Q3 as spending surges, stock crashes

Gemini Space Station, the crypto exchange founded by Tyler and Cameron Winklevoss, on Monday reported a bigger net loss than analysts anticipated in its first earnings release since going public.

The company posted a loss of $6.67 per share, compared with the $3.24 loss expected by analysts surveyed by Bloomberg. Gemini, which debuted on public markets in September, has seen its stock price fall almost in half from the peak, amid a broader decline in crypto prices.

Gemini’s GEMI stock quickly crashed by more than 11% in after-hours trading after the earnings report, slipping below $15 and breaking a new all-time low, according to data from CNBC.

Still though, Gemini’s revenue still climbed sharply. Net revenue for the quarter came in close to $50 million, which was a 52% increase from the prior quarter. The company reported that more than $26 million came from transaction fees, while around $20 million came from services like its credit card and institutional staking. The company’s adjusted EBITDA stood at negative $52.4 million, showing that growth did not outweigh spending. Trading volume rose to $16.4 billion, up 45% quarter-over-quarter, driven by larger institutional movement, which rose nearly 50% from the previous period.

Gemini sees surge in services income after expansion into new markets

According to the earnings report, Gemini has been adding new features and expanding into new regions. A self-custody wallet was introduced this quarter, and the company also secured a MiCA license in Europe in August and launched operations in Australia in early October as part of its regulatory expansion strategy.

Services revenue now represents nearly 40% of Gemini’s total revenue, compared with under 30% from just a year ago.

The Gemini credit card passed 100,000 open accounts, with more than $350 million in transaction spending, which was double the previous quarter’s usage, while staking balances increased to $741 million.

After going public, the company also repaid debt and opened a $150 million credit facility for credit-card receivables to improve capital efficiency

For the full year, Gemini forecasted $60 million to $70 million in services and interest revenue based on continued credit-card and staking growth.

The company is also entering new business areas. It is working on prediction markets that allow users to place bets on political and sports outcomes. It has begun offering tokenized U.S. stocks, letting users gain exposure to equities through blockchain representation.

But analysts at Goldman Sachs wrote in October that Gemini’s expansion of the credit-card business “introduces both credit and interest rate risk in an economic downturn,” pointing out the financial pressure that could build if consumer defaults increase or credit conditions tighten.

Winklevosses political activity triggers valuation concerns

Outside the company’s financials, Cameron and Tyler have also been active politically. In August, they donated $21 million to a political action committee supporting President Donald Trump and the Republican Party’s pro-crypto policy goals.

They also attended multiple events at the White House, including a donor reception in the new ballroom.

From a valuation standpoint, the company’s parent entity, Gemini Space Station, currently trades at a price-to-sales ratio of 13.9x, which is way higher than both sector peers and the broader US Capital Markets industry average of 3.8x.

The stock last closed around $16.18, and if you do that math, you’ll see that the price means investors are paying a large premium per dollar of revenue even though Gemini remains unprofitable… technically.

That gap between high valuation and ongoing losses is what fueled the steep stock decline after earnings were released.

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