Stonegate Capital Partners has initiated coverage on Fold Holdings Inc. (NASDAQ: FLD), revealing a company experiencing substantial growth while strategically positioning itself at the intersection of cryptocurrency and mainstream retail finance. The coverage comes as Fold delivered $7.4 million in revenue with net income of $0.6 million for the quarter, maintaining nearly 50% top-line growth year-over-year despite reporting adjusted EBITDA of negative $4.2 million as legacy products continue scaling.
The company's operational metrics show significant momentum, with $265 million in total transaction volume for the quarter and over 10,000 net new accounts added. Year-over-year comparisons reveal even more substantial growth, with new accounts increasing 2.1% and transaction volumes climbing approximately 41%. Management has reiterated expectations for typical seasonal strength heading into the fourth quarter, suggesting the current growth trajectory should continue.
Fold's expansion strategy appears well-executed, with headcount roughly doubling year-over-year while maintaining margins, demonstrating early operating leverage in the business model. The quarter reflected improving operating leverage with focused, disciplined spending on distribution and product development, indicating efficient scaling of operations.
The company's recent Bitcoin Gift Card launch has achieved significant retail distribution, now available in approximately 2,000 Kroger locations according to management. This creates a mainstream cryptocurrency on-ramp outside the traditional app environment, representing what management describes as "the first step to what should be an expansive retailer footprint." The partnership with Steak 'n Shake that rewards customers with a $5 Bitcoin Gift Card provides additional scalable pathways for broad retail distribution. Management anticipates that data from gift card sales, still in early stages, will lead to wallet expansion at a negative cost of acquisition to the company.
Across major products, management indicated that unit economics are already positive at the product level, with current focus shifting to scaling distribution. Mid-funnel initiatives include expanding exchange access to more users and additional states while adding larger order funding options, including wire transfers, which should increase average ticket size and trading frequency.
The most significant growth catalyst appears to be Fold's Bitcoin Rewards Credit Card, emerging as the flagship growth lever. Built in partnership with Visa and Stripe, the card aims to deliver a premium, bitcoin-native credit experience. The card offers rewards up to 3.5 percent on every purchase with no categories or deposit requirements, with bonus earnings up to 10 percent at top brands in the Fold network. Management reports the waitlist has surpassed 80,000 customers, targeting initial distribution by year-end with general access expected in the first quarter of 2026.
Management highlighted the credit card's potential to capture greater wallet share than debit cards and transform everyday spending into durable engagement that cross-sells into trading and custody services. The card is positioned as a high cross-sell engine that could fundamentally change how consumers interact with cryptocurrency rewards in their daily financial activities.
Financially, the company maintained a strong position with ₿1,526 in its investment treasury as of the third quarter, supporting a Bitcoin NAV of approximately $160 million. Management views the Bitcoin treasury as a differentiated, lower-cost source of growth capital compared to traditional equity issuance or term debt. The company has multiple funding levers available, including a $250 million equity purchase facility tied to product momentum and market conditions. During the quarter, Fold secured a $45.0 million revolving credit facility to support future growth initiatives and strengthen the company's financial position.
Stonegate's valuation analysis utilizes two comparative approaches, with a blended EV/Revenue analysis arriving at a valuation range of $5.42 to $7.71 with a midpoint of $6.57, and an EV/BTC NAV analysis producing a range of $5.23 to $8.65 with a midpoint of $6.94. These valuations reflect the company's current growth trajectory and potential for further expansion as cryptocurrency adoption continues evolving in mainstream financial services.
