I was talking to someone about Celsius earlier today and realized something interesting. For years, my advice to investing-newbies has been to buy into a company (like Apple) and then get on the quarterly analyst call to hear directly from the CEO how they're doing and how they think about their market. Of course, you don't have to own company stock to participate, but having skin in the game makes it more interesting.
Today I realized that among all the other cool things Celsius does, their weekly AMA does exactly the same thing for the Celsius community as the quarterly analyst calls do for equity investors.
Celsius is exciting in many ways. From the consumer-side of the solution they're delivering (yield/loans), to the approach of sharing 80% of revenue with the community, to the unprecedented transparency... to say I think about it (with gratitude) daily is an understatement.
To learn more about how Celsius creates value for both retail and intitutional investors to build a more equitable financial system, read this:
Even if you're not as excited as I am, you might wonder how to participate in the upside. There are four ways to participate, listed in order of ease, low-risk to high:
- Become a (retail) customer. The job you hire Celsius to do is create yield while hodling your crypto. Down the line, you might hire Celsius to give you a loan so that you don't have to sell (which is a taxable event, and eliminates any future upside). But, if you get started, you are creating a passive income stream that dollar cost averages into crypto and builds financial freedom. This is the place to start, if only to learn about what they're doing to change the world.
- Invest in the community. This a fancy way of saying, "buy the $CEL token". It's hard, but not impossible to buy the token in the US but if you're invested in the product, you might consider the benefits of owning the token. I didn't at first, I was skeptical. I was a customer for about two years before I bought the token. It's about the risk. The yield they pay is better than a bank, even if you never buy a single $CEL token. I was satisfied until I built trust. The community is pretty bullish on the token, even after last year's spectacular growth. For good reason. Even Michael Saylor is talking about the pressure Celsius is putting on the big banks. Owning the token, aside from token appreciation, gives you opportunities for increased yield and lower loan interest payments.
- Invest in the company. They've already raised one round on Bank to the Future and are about to raise a second. In the US, this is for accredited investors only. Read more here, and apply early if you're accredited and want to participate. Proving accredation takes time, and you want to get that done before the round starts.
- Invest in your career. This is pretty straightforward. Celsius is growing and hiring a lot of people (and have job fairs in April, May, and June). I'd find it hard to believe though, that if you're not a customer you have a chance. So, what are you waiting for?
Partly, I thought about this framing of the opportunity for myself.
In particular I had the question, do I participate in the equity raise? It's not like I have infinite money to invest in everything, so if I did invest, I would be using money that would otherwise be invested elsewhere.
Following this line of thinking, I noticed something as others talk about the Celsius token.
Market Cap vs Token Cap
Sometimes, when people talk about $CEL on Clubhouse and Twitter, they conflate market cap with token price.
I think this is fundamentally wrong. The market cap is associated with the equity raise, not with the value of the tokens (except as there are tokens in the corporate treasury, so presumably that hits the market cap through the balance sheet).
It gets kinda circular... the token has a price, that drives the value of the treasury, which means the company is worth at least treasury plus X, so the token should be worth more. It doesn't/shouldn't quite work that way. The company being worth more shouldn't really feed back into the token being worth more. Or rather, it does but indirectly (which is part of the power of the Celsius flywheel).
Shares measure equity in the company.
The $CEL token measures equity in the community.
The company is stronger with a strong community, but it's how the company leverages the community that drives the equity valuation. For example, they have a lower customer acquisition cost because they invest in the community rather than in traditional marketing for customer acquisition.
So, I wonder, and I am not sure, but I think it’s a good hypothesis, that the token value represents the value of the platform, not the value of the company. How much value is Celsius creating in the community, that’s the value of the token.
The value of the company is simply some multiple of earnings and future cash flows +/- emotion.
One final analogy on this platform vs company point. Think of Microsoft.
Microsoft created billions (trillions?) of value on their enterprise platform. A whole economy of companies built value on Microsoft, value that Microsoft didn’t capture directly (for example, in its stock price). Microsoft itself was valued by its share price (multiple of revenue, discounted cash flows) but not the value that it created in the world. The value Microsoft created in this world wasn’t really captured by investors in the way that a token representing the Microsoft Platform might have.
At least, that's my hypothesis roughly written out. What opinions do you have?
Update April 6, 2021
Celsius has been awarded "best cryptocurrency wallet" at the 5th annual FinTech Breakthrough Awards. In large part because of their mission:
to provide people with better opportunities to gain financial freedom