After a Rollercoaster February, Is Galaxy Digital Stock a Buy?

Galaxy (TSX:GLXY) stock soared by 30% before dropping by 21%, so what’s been going on, and should investors get in on it?

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Galaxy Digital Holdings (TSX:GLXY) has been on a rollercoaster ride of epic proportions, and not just in February. Galaxy stock is now down by 74% in the last year alone. But February was especially hard. Shares fell by 17%, climbed by 30%, only to then fall by 22%. I wouldn’t blame you if you felt dizzy just watching.

So, now, with shares back down, is Galaxy stock finally a buy again?

Why the rollercoaster ride?

Before we decipher whether Galaxy stock is a buy or not, let’s look at why the company climbed and fell in the first place. The blockchain and cryptocurrency company has been on a whirlwind of acquisitions over the years. This is despite seeing earnings fall short of estimates.

Yet in mid-February, shares of Galaxy stock climbed 30%, which perhaps could have been tied to the stock plummeting so much in so little time. It could also have been tied to the company attending an investor conference around that time. But it remains unclear.

It’s no wonder then that shares fell back again once it became clear how unclear the climb was. No analyst upgrades, no big changes, and the company continues to miss earnings estimates. At the same time, several analysts in recent months have reiterated the company remains a buy. Let’s look at why next.

The future is coming … eventually

Cryptocurrency has long been touted as the future of finance. The digital economy is growing, and Galaxy stock could certainly be a large part of that future. After all, it invests in every part of the process from mining to its own currency.

This is why Galaxy stock continues to acquire more and more businesses and to create a larger crypto-finance institution for when this eventuality comes. However, that eventuality isn’t likely to come for some time.

Cryptocurrency companies in general have taken a huge hit in the past year with the market the way it is. No one has the cash available to invest in a future that remains quite unclear. That being said, when it does come, analysts believe Galaxy stock will be one of the first to recover.

Should you buy?

If you’re a long-term holder, Galaxy stock certainly does look like a deal. As mentioned, it’s down 74% in the last year. Recent movement notwithstanding, shares are a fraction of the cost investors once enjoyed.

However, given the volatility of the market and in particular cryptocurrency, I would call this an incredibly risky investment at this rate — perhaps only slightly less risky than investing in a cryptocurrency itself.

That being said, if you put a small stake towards Galaxy stock, analysts believe that it could double in the meantime. Only a few analysts have weighed in, however, so it might be best to wait until more have had their say before bringing this stock into your portfolio.

While Galaxy stock may be a low share price, just remember: a low share price is one thing; cheap is entirely different.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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