Benchmark backs Exodus after 25% workforce cut, says stablecoin pivot is being overlooked

Benchmark reiterated its Buy rating on Exodus Movement after the crypto wallet provider announced on Friday that it would be laying off 25% of its workforce.

The brokerage sees the restructuring as a way to free up resources to build Exodus' stablecoin payments business, though it lowered its forecasts and nearly halved its price target due to a weaker crypto market.

Analyst Mark Palmer lowered his target to $12 from $23 while maintaining its Buy rating on (EXOD), saying investors are "underappreciating the optionality embedded in the payments infrastructure" that Exodus has after acquiring Monavate and Baanx in May.

The workforce cuts are expected to save Exodus roughly $10 million to $13 million in annualized cash expenses starting next year. Palmer called the move "operational follow-through" on its pivot from a self-custody wallet provider into a crypto payments company.

About 90% of Exodus' past revenue has come from crypto swap fees, leaving the business heavily tied to trading activity. Palmer said the Monavate and Baanx acquisitions give the company new revenue opportunities through card issuance, stablecoin settlement and enterprise payments, which should reduce its reliance on cyclical crypto market phases.

Still, Palmer trimmed his second-quarter and full-year forecasts mostly due to the bear market conditions seen in crypto over the past nine months. He lowered his estimates for second-quarter revenue to $30.2 million from $34.2 million and cut his full-year revenue forecast to $134.7 million from $151.7 million.

Exodus reported first-quarter revenue of $22.7 million in May, down 37% from a year earlier, while its net loss widened to $32.1 million.

Shares of Exodus were down nearly 3% to $4.91 on Monday. The stock has fallen roughly 68% year to date and 85% over the past 12 months, according to The Block's crypto equities data.