Gemini remains 'hidden gem' despite shares falling 57% since debut: Mizuho

Winklevoss twins-led crypto exchange Gemini (GEMI) remains a "hidden gem" despite its shares falling significantly since its September initial public offering, analysts at Mizuho said.

Google Finance data shows that Gemini closed Wednesday at $13.8, representing a 56.88% fall since debut or according to Mizuho, a 17% fall in the third quarter relative to the S&P 500. It has, however, reported a 52% revenue jump in its first quarterly results since going public.

Still, Mizuho analysts gave Gemini an "outperform" rating, the same rating it gave the company in its October report, and reiterated a price target of $30. 

"We believe it remains a hidden gem(i) as the company leans into two major growth drivers: prediction markets and SMB cards," the analysts said. "Management is already in the process of getting the appropriate licenses and likens prediction markets to the Winklevosses adopting Bitcoin early in 2012."

In May, Gemini filed an application to the Commodity Futures Trading Commission to operate a designated contract market, the regulatory status required for a derivatives exchange. This new platform, currently under review, could potentially be the exchange for prediction contracts, according to a recent report from Bloomberg.

Gemini also plans to launch a card for small and medium-sized businesses (SMB), after its existing card program surpassed 100,000 accounts and $350 million in quarterly volume, with 64,000 sign-ups in the third quarter. 

While the exchange saw its marketing cost rise by $17 million quarter-over-quarter, a large share of those costs consisted of one-time fees for new sign-ups, which analysts said were "for a good reason."

"Gemini enjoys several key competitive advantages with its innovative all-in-one app suite for seamless trading, staking, and DeFi access, unmatched security and regulatory compliance as a trusted institutional-grade exchange, and its recently impressive user growth," Mizuho analysts wrote in the report.

Nonetheless, the analysts noted that crypto market volatility, potential changes in securities, stablecoins or exchange licensing rules remain the key risks for Gemini.