Flow Traders Enters Bitcoin Credit Strategy Amidst Undervaluation Concerns

Flow Traders has entered into Bitcoin Onchain Credit Strategy with Lombard Finance, becoming the first institutional participant in this new setup for borrowing stablecoins backed by Bitcoin collateral. This move is notable given Flow Traders' mixed performance over the past few years - while it has a 3-year total shareholder return of 33.95%, its 5-year total shareholder return is down 13.03%. The company's recent share price returns suggest momentum has softened, but this crypto credit move could be a sign that its core trading engine is strengthening.

The current valuation indicates that Flow Traders' stock is undervalued, with a narrative fair value of €29.78 and a current share price of €26.16. The Trading Capital Expansion Plan and the increase in trading capital by 33% over the year have enhanced Flow Traders' ability to capture market opportunities, potentially raising revenues and returns on capital. Analysts expect lower top line assumptions but fatter profitability, with a specific earnings target and a future P/E that still sits below the broader capital markets peer group.

However, Flow Traders faces two key risks: execution on higher fixed expenses of €190 million to €210 million, and the risk that digital asset gains reverse. As such, investors should consider acting while sentiment is forming and review the data for themselves by checking the 3 key rewards mentioned in the article.