Rosenblatt on Thursday cut its price target on Gemini Space Station (NASDAQ:GEMI) to $11.50 from $26.00, while keeping a Buy rating on the equity. The firm said the new target is based on a valuation multiple of 5 times its 2027 revenue estimate, compared with a peer average multiple of 10 times, a discount Rosenblatt said reflects execution risk, smaller scale and a relatively long path to profitability.
The firm pointed to a company-wide overhaul that has included the departure of the chief operating officer, chief financial officer and chief legal officer. Gemini also implemented substantial expense reductions earlier in the month as part of the broader restructuring effort.
Gemini pre-announced preliminary fiscal 2025 results indicating that the company expects revenue between $165 million and $175 million for the year, up from $141 million in 2024 - a year-over-year rise in the range of roughly 17% to 24%. Rosenblatt highlighted that the company’s Services segment produced fourth-quarter revenue that came in more than $15 million above the firm’s prior estimate, and said this stronger Services performance helped offset weaker trading activity amid an industry-wide drop in trading volumes.
Despite the Services outperformance, the equity has suffered a steep decline since its initial public offering five months ago. Shares have fallen nearly 80% from the IPO price and were trading around $6, close to a 52-week low of $5.83. The company’s six-month price return stands at -81%. InvestingPro data cited in the update shows a Financial Health score labeled as "WEAK" and a negative gross profit margin of -12%. Rosenblatt attributed the stock’s drop to tougher market conditions and lower multiples for crypto equities.
Other sell-side reactions have followed Gemini’s restructuring and strategic pullback. Cantor Fitzgerald downgraded the stock from Overweight to Neutral and cut its price target from $14.00 to $8.00. Needham kept a Buy rating but reduced its price target from $23.00 to $10.00. Evercore ISI moved the rating from Outperform to In Line and lowered its target to $10.00 from $15.00 after Gemini said it would exit operations in Europe and Australia to concentrate on the United States and Singapore.
The combined developments - notable executive departures, a program of cost reductions, a refocus of geographic operations and a set of lowered analyst targets - have raised investor concern regarding the company’s strategic direction and leadership stability. Rosenblatt’s valuation approach and discount to peers underscores the firm’s view that risks tied to execution and scale remain material as the company pursues its revised plan.
For investors seeking additional detail on Rosenblatt’s valuation and deeper analysis, the firm referenced a full Pro Research Report available on InvestingPro that covers this and more than 1,400 other US equities.
Market context: The signals from multiple research firms and the company’s own preliminary guidance reveal a mix of operational resilience in Services and broader pressures from lower trading volumes and weaker market multiples for crypto-related equities. How the company executes its restructuring and stabilizes leadership will be central to closing the gap between current market valuation and the levels implied by various analyst models.