Shares of Gemini Space Station surged more than 20% in premarket trading on Friday after the cryptocurrency exchange reported a smaller-than-expected quarterly loss and announced a $100 million investment from its founders.
The New York-based company’s shares, which were priced at $28 during its initial public offering, closed at $5.26 on Thursday before rallying in premarket trading.
The investment was disclosed late Thursday and came from Winklevoss Capital Fund, the family office and primary venture capital vehicle of founders Cameron and Tyler Winklevoss.
The investment was made at $14 per share, with payment completed in bitcoin.
Quarterly loss beats expectations
Gemini reported a net loss per share of 93 cents for the three months ended March 31.
The figure came in better than analysts’ expectations of a loss of $1.03 per share, according to LSEG estimates.
Quarterly revenue climbed 42% year-on-year to $50.3 million.
The company said the increase was driven by growth in services and over-the-counter platform revenue.
The stronger-than-expected earnings performance helped lift investor sentiment after months of pressure on the stock.
However, analysts said the founders’ investment played a significant role in the market reaction.
As mentioned in a Reuters report, Evercore analyst Adam Frisch said, “Were it not for the founders’ $100 million strategic investment, we think Gemini would likely be down on the print as key metrics like user and revenue reacceleration fell well short of pre-IPO expectations.”
Frisch also noted that Gemini has not provided revenue guidance, leaving investors with limited visibility into the company’s expansion plans in predictions and derivatives markets.
Winklevoss twins defend company valuation
Gemini CEO Tyler Winklevoss said the market has significantly undervalued Gemini.
The founders’ latest investment comes as the company attempts to stabilise operations and reassure investors following a difficult period marked by restructuring efforts and declining share prices.
The Winklevoss twins first gained public attention after filing a lawsuit against Mark Zuckerberg, alleging he stole their idea for Facebook.
The dispute was settled in 2008 through a combination of cash and stock.
Lawsuit and restructuring weigh on sentiment
The earnings release arrives during a turbulent period for Gemini and its founders.
The company, along with Cameron and Tyler Winklevoss, is facing a shareholder lawsuit alleging that investors were misled about Gemini’s business prospects.
The lawsuit points to strategic changes, workforce reductions, and executive departures as factors that contributed to the company’s stock decline.
In February, Gemini announced plans to cut around 25% of its workforce and scale back most of its international operations.
The company also parted ways with its chief operating officer, chief financial officer, and chief legal officer.
Danijela Stojanovic has since been serving as interim finance chief.
Despite Friday’s sharp share price rally, analysts indicated that concerns remain over Gemini’s ability to accelerate revenue growth and regain investor confidence in the long term.
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