Key Takeaways
- Citi analyst downgraded Gemini Space Station (GEMI) to Sell from Neutral, slashing the price target from $13 to $5.50
- Shares dropped 5.1% in premarket hours to $6.75, bringing year-to-date losses to 28%
- Analyst forecasts a $263 million adjusted EBITDA loss in 2025, with profitability not expected until 2029
- February app downloads plummeted to 41,000, compared to more than 100,000 monthly in the previous nine months
- Company has slashed workforce by 25% and exited multiple international markets including the UK, Europe, and Australia
Gemini Space Station made its public debut last September at $28 per share. Today, shares hover around $6.75. The decline intensified Wednesday following a harsh analyst reassessment.
Gemini Space Station, Inc. Class A Common Stock, GEMI
Peter Christiansen, an analyst at Citi, issued a downgrade of GEMI to Sell from Neutral, simultaneously reducing his price objective to $5.50 from a previous $13. The downgrade appeared in a Wednesday research report, published just before Gemini’s scheduled fiscal-year earnings announcement on Thursday evening.
Premarket trading saw shares decline 5.1%. Year-to-date performance now shows a 28% loss.
The Winklevoss brothers brought Gemini public during a favorable period for cryptocurrency markets. Bitcoin was hovering near record highs when GEMI launched. However, since October, Bitcoin has retreated approximately 40% from those peaks, dragging trading activity down across the entire sector.
This market contraction is directly impacting Gemini’s performance. Reduced trading activity translates to diminished revenue, compounding challenges for an already unprofitable operation.
Path to Profitability Extended to 2029
Citi’s previous projections anticipated Gemini achieving positive EBITDA by 2028. That timeline has now been extended to 2029 or later.
For the current year, Christiansen anticipates an adjusted EBITDA deficit of $263 million. The company continues to consume cash while attempting to expand its platform amid unfavorable market conditions.
“We have increasing concerns the company will be challenged to scale profitability within a reasonable time frame for equity investors,” Christiansen stated in his report.
The analyst also noted that legislative advancement on the CLARITY Act, which could provide regulatory clarity for cryptocurrency platforms, remains stagnant as lawmakers continue debating critical provisions.
User Engagement Shows Worrying Trends
User metrics paint a concerning picture. Monthly unique visitors to Gemini’s app and website have declined consistently since the September IPO.
February app downloads totaled just 41,000. This represents a dramatic drop from the previous nine consecutive months, each of which exceeded 100,000 downloads.
For a platform dependent on network effects, such a substantial user decline presents significant challenges that typically require major catalysts to reverse.
Gemini has implemented aggressive cost-cutting measures. The company announced last month it would eliminate approximately 25% of its workforce.
Additionally, Gemini confirmed plans to cease operations in the UK, European Union, and Australia. Senior executives including the COO, CFO, and Chief Legal Officer have all left the organization.
“We find ourselves stretched thin with a level of organizational and operational complexity that drives our cost structure up and slows us down,” the Winklevoss twins explained in a blog post addressing the international withdrawal.
While these reductions aim to extend the company’s operational runway, Citi remains skeptical about whether these measures provide sufficient time for a turnaround.
Gemini is scheduled to release complete fiscal-year results Thursday after market close. This earnings report will provide investors with critical insights into whether the company’s restructuring efforts are producing tangible results.
