GBTC

We rate Grayscale Bitcoin Trust ETF (GBTC) as Avoid with a composite score of 31.1/100 at a current price of $49.95. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in value (49th percentile) and quality (29th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (19th percentile) and stability (21th percentile) tempers our overall conviction. We assign a No Moat rating (28/100), High uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Grayscale Bitcoin Trust ETF holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 31.1/100 places it at rank #4451 in our full 7,333-stock universe. At $8.9B in market capitalization, Grayscale Bitcoin Trust ETF is a mid-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 229%, though momentum at the 21th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 100% (+83.0pp vs sector) and net margins of 85.1%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $49.95, Grayscale Bitcoin Trust ETF is trading near fair value based on current fundamentals. Our value factor score of 49/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 1.9x (discounted to peers), P/S of 1.8x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a High uncertainty rating to Grayscale Bitcoin Trust ETF. Key risk factors include below-average price stability (21th percentile), weak quality scores (29th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: below-average price stability (21th percentile); weak quality scores (29th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 21th percentile and quality factor at the 29th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate Grayscale Bitcoin Trust ETF's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at N/A, and the balance sheet is managed within acceptable parameters (D/E: N/A). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Grayscale Bitcoin Trust ETF falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Grayscale Bitcoin Trust ETF receives a Avoid rating with a composite score of 31.1/100 (rank #4451 of 7,333). Our quantitative framework assigns a No Moat (28/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 28/100.

Our analysis does not support a constructive view on Grayscale Bitcoin Trust ETF at this time. The combination of limited competitive advantages, high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.