Investor Concerns Over Galaxy Digital’s LUNA Exposure “Unwarranted”

Galaxy Digital’s stock fell over 40% this week, but according to an analyst from BTIG LUNA-related concerns are “clearly unwarranted.”

Investor concerns over Galaxy Digital being subject to significant losses due its exposure to Terra’s LUNA token are “clearly unwarranted,” according to Mark Palmer, a BTIG equity research analyst.

Galaxy shares fell over 40% this week and were down more than 20% on Wednesday. They were falling 1.6% to US$8.02 on Thursday.

In the company’s management discussion and analysis filing for the Q1 ending March 31, Galaxy said the largest contributor in the quarter to its $355 million in net realized gains on its digital assets came from sales of LUNA. Galaxy had previously said in its fourth-quarter earnings release that it held $407.6 million worth of LUNA as of December 31.

Palmer wrote:

“Our takeaway from GLXY’s disclosures regarding its LUNA exposure is that it appears that the company had sold all or most of its position at a healthy gain during 1Q22, reflecting the token’s strong appreciation during 2021.”

Galaxy did not immediately respond to CoinDesk’s request for comment.

Algorithmic stablecoin terraUSD (UST) recently lost its 1:1 peg to the U.S. dollar, while Terra’s native LUNA token continued its exponential decline this week. At the time of writing, LUNA trades at $0.00037, significantly down from close to $100 per coin just last month.

BTIG reiterated a buy rating on Galaxy with a C$37 ($28) price target.

Galaxy earlier this week noted that it had won approval from its board to buy back up to 10% of shares amid the existing market conditions.