Comparing RPS (Revenue Per Share) between Cryptos & Stocks
After the maelstrom 2018 has brought cryptocurrency investors, capital is now looking to be put to work in cryptocurrency companies that provide value through commercially released products that are expected to produce revenue. This is the most powerful transfer of upside value a publicly traded vehicle, such as a cryptocurrency or stock, can experience aside from outright profitability.
For any publicly traded vehicle, “Revenue and Earnings Per Share (EPS) are the heart of the fundamental analysis of a company’s worth.”
Is there an analog to the RPS multiple in valuing cryptocurrency companies? We believe there will be in the near future, and similar to RPS or EPS (Earnings Per Share) for stocks, it will used as a way to more accurately determine the real value of a cryptocurrency company.
We decided to run trailing RPS (Revenue Per Share, trailing, last 12mos) multiples for a few stocks compared to cryptocurrencies. Here’s what we found:
Comparing RPS multiples, or RPT (Revenue Per Token) for cryptos and stocks with hypothetical revenue numbers included for XRP and VXV:
Source: Capital IQ capitaliq.com, finance.yahoo.com/quote/GOOG/key-statistics?p=GOOG
Note: US public companies can increase their Outstanding or Authorized shares at anytime with SEC approval. A public company’s Outstanding Shares would be equivalent to a crypto’s Total Supply and a public company’s Authorized Shares would be equivalent to crypto’s Max Supply.
Hypothesis:
We can calculate the RPS (or RPT, Revenue Per Token) metric and begin to apply it in valuing crypto companies. This can be done before utilizing the EPS (Earning Per Share) metric in valuing cryptos as it relies on net income which becomes a valuable metric only after significant revenue generation. We predict that in the near future, RPT multiples will come down to meet traditional market RPS multiples which more closely mimics future global economic conditions typically 6mos out. This will likely happen as crypto companies begin to generate revenue, as many are expected to do by the global financial marketplace.
Metrics like the RPS or RPT applied to crypto can be useful when determining how to best optimize baskets of stocks or cryptocurrencies. We’ll soon be making metrics like these available via our VXV wallet-enabled API. Stay tuned!
