Finance Pacific Trader: How to bet on bitcoin safely (and for pennies!)

Crypto exchange WonderFi Technologies stands to profit from bitcoin’s rehabilitation

The stock: Well, that didn’t take long. FTX founder and cryptocurrency poster boy Sam Bankman-Fried ended up convicted on seven counts of fraud and conspiracy after just four hours of jury deliberations earlier this month. Funny thing, though: bitcoin has treated this as a kind of catharsis, recently topping $50,000 on reports that BlackRock, the world’s largest asset manager, is preparing to launch a bitcoin exchange-traded fund. So how can you participate in crypto’s redemption without putting your money in the hands of shady characters like Bankman-Fried? One way is to invest in the stock of a relatively transparent and regulated exchange operator like WonderFi Technologies (TSX:WNDR).

The drivers: A caveat—WonderFi is truly a penny stock, closing at 14 cents as of Tuesday, November 14. It has never been profitable. But if you’re attracted to crypto, that probably doesn’t faze you. Indeed, WNDR provides an undeniably affordable entry point compared to bitcoin itself.

And it has at least the potential to take off. Last summer Vancouver-based WonderFi, which counts TV personality Kevin “Mr. Wonderful” O’Leary as a strategic investor, merged with rival exchanges Coinsquare and Coinsmart Financial, creating the largest crypto trading platform in Canada, with more than 1.6 million users. It also has side hustles it hopes to develop in payments and gaming. Since the merger, the combined operation has trimmed its head count to 93 from 143, reducing costs.

The company reported $9.9 million in third-quarter revenue, but that number doesn’t reflect the recent jump in crypto prices and trading volume, to which its performance is directly tied. WonderFi stated this week that it was cash-flow positive in October and is on track to deliver positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) this quarter.

Word on the street: “With bitcoin trading at levels not seen since May 2022, WNDR remains a name to watch entering 2024,” Haywood Capital Markets analyst Gianluca Tucci wrote in a report this week, without putting a formal rating or target on the stock. “The company is focusing its efforts on organically streamlining operations and getting to profitability and is working with various authorities to build a regulatory DeFi [decentralized finance] framework.”

Coming and going: Vancouver-based Teck Resources (TSX,NYSE:TECK) has reached a truce with Swiss-headquartered suitor Glencore PLC. This week, the company announced an agreement to sell its coking coal operations in southeastern B.C. to Glencore and Asian steelmakers Nippon Steel and POSCO for US$8.9 billion. As part of the deal, Glencore will refrain from making bids for the rest of Teck, which focuses on copper and zinc mining, for two years. A federal government review of the transaction is expected to take a year.