Reasonable valuation of 7 billion? Is it profitable to buy PUMP for public sale?

Original text: A Valuation of $PUMP

Author: Sunny Shi, Messari Crypto

Compiled by: Alex Liu, Foresight News

According to major media citing people familiar with the matter, pump.fun is preparing to sell 25% of PUMP tokens at a valuation of $4 billion to raise $1 billion. Is this price attractive? Messari's Sunny Shi built a valuation model for PUMP, and the results show that its FDV (full circulation market capitalization) could reach $7 billion. If the prediction is correct, buying PUMP tokens means making a profit. But there is an important premise. Here is their valuation process (Sunny Shi’s perspective, “we” refers to Messari):

No matter how you view Memecoin, this track is still "printing money". Although the transaction volume of the pump.fun coin issuing platform has declined compared with the beginning of the year, it is still far higher than the level in most of 2024.

Pump.fun's transaction volume is higher than most of the 24-year period, data: Messari

People may also underestimate the success of PumpSwap. This DEX went live about three months ago, but has significantly eroded Raydium's market share on Solana.

Comparison of market share between PumpSwap and Raydium, data: Messari

Our valuation method uses a top-down model, assuming overall transaction volume in the crypto market, Solana share, startup platform share, and PumpSwap market share. These assumptions and models are only open to enterprise customers, but I will share the main conclusions.

In our base case, we believe Memecoin will occupy a segment in the broader crypto economy because they are more suitable for speculative purposes than NFTs. Of course, the Solana ecosystem will undoubtedly develop towards new asset-to-diversity as it matures, but this is also likely to be true.

We believe that even if pump.fun's share of the Solana ecosystem has declined slightly, PumpSwap continues to grow, the pump project is still expected to generate approximately $675 million in revenue over the next two years. Calculated at a 10-fold valuation multiple, the corresponding FDV is approximately US$7 billion.

However, the key premise is: If the project party chooses an opaque token/equity structure that distributes most of the revenue to insiders rather than token holders, then we think the current market has become quite cautious and will not ignore this bad way of value accumulation. In our full report, we provide a valuation form to evaluate the potential value of PUMP based on the percentage of revenue that token holders can obtain.

No matter how the market ultimately judges, this is an excellent opportunity to participate in the most profitable crypto app in history. Now it depends on whether the project team gives token holders enough value to participate (buy-in) to make it a project worth investing in.

Editor's Note: In Aevo's pre-market perpetual trading market, the price of PUMP is US$6, corresponding to 6 billion FDV (full circulating market value).

PUMP pre-market price on Aevo

Original link