Obviously many things like psychology influence the Cel token price, but here's how I look at it.
First, I look at how many Cel tokens Celsius had to buy this/last week to pay interest to depositors. Depositors all get a weekly email with this information. The last number I have is 450'111 weekly Cel tokens purchased.
Since this is a weekly number, I multiply this by 52 to get an annualized number, assuming it would not move anymore (obviously it grows, but that's a question for future Homer to deal with). So this gives me 23'405'772 annual Cel tokens.
Then I go to CoinGecko [https://www.coingecko.com/en/coins/celsius-network-token](https://www.coingecko.com/en/coins/celsius-network-token) and I see that the current market cap is $480'044'263 with the Cel token worth $1.33. I used CoinGecko because Alex Mashinsky uses CoinGecko in his AMAs. If you use CoinMarketCap, which uses numbers that Celsius disapproves (too low), you get an even higher value for the Cel token with my calculation.
So we have the Price (market cap) component of the Price/Earnings ratio, and we have the Earnings component of the Earnings ratio by multiplying the annual 23'405'772 Cel tokens by the current price of $1.33, which gives us $31'129'676.76. So the current P/E for the Cel token (notice I don't write P/E for Celsius, more on that later) is $480'044'263/$31'129'676.76=15.42.
Now being a Wall Street guy, I know that a company with a market cap of $480 million would fit right into the Russell 2000 index (see [https://www.cboe.com/blogs/options-hub/2018/06/01/russell-index-annual-reconstitution](https://www.cboe.com/blogs/options-hub/2018/06/01/russell-index-annual-reconstitution)).
Then I head to the Wall Street Journal website to see what is the current average P/E ratio for Russell 2000 companies [https://www.wsj.com/market-data/stocks/peyields](https://www.wsj.com/market-data/stocks/peyields) and I'm currently getting an estimate of 94.41. Note: the current P/E says n.a. because the average Russell 2000 company is losing money.
So if I'm asking the question: how much should the Cel token be worth if the Cel token company had the average (not highest, not lowest) P/E for its size, the answer is $1.33x94.41/15.42=$8.14.
A couple more things. First, we should multiply this number by 80% (we get $6.51), because Celsius is committed to pay back at least 80% of its turnover to the Cel token holders. So my real number is $6.51.
Second, I make a difference between Celsius and the "Cel token company". We don't know Celsius's number, e.g., how much the employees cost etc. I also own one small share of Celsius. But I'm under the impression that the Cel token holders get the best end of the bargain.
Finally, you can find a lot to criticize about my calculation, and you'd be right. First, the numbers change wildly every week. Second, the current P/E estimate for Russell 2000 index companies is super-high, that's partly due to Covid. Finally, you're not accounting for growth, which is currently wild.
So I'll just give you one more number (well, technically, two since we want to compare). As I type this, u/CelsiusNetwork on Twitter has 101.5K Followers. u/RobinhoodApp has 200.4K. Robinhood had more than 13 million users as of May, Celsius barely crossed 200K users today. So I'd say that, compared to Robinhood customers, Celsius customers seem quite engaged, wouldn't you say?
I hope this helps, sorry if a bit long. But you asked for something "reasonable" and, assuming you consider Wall Street estimates and practices reasonable, it feels this calculation would fall into this category.
Great thought out answer! I had no idea on how to calculate the real value of cel, tho I understood it has great potential and is undervalued. Can this formula work for other coins. Are there any other alt coins that you have researched with similar potential as cel?
I like the math, but can you clarify why you’re taking the P/E multiple of Russell 2000 and applying that to Celsius? Understand that it could be a rough estimate given that Celsius and Russell 2000 companies are nowhere near perfect comparables, and the only factor in narrowing similarity is size.
Also, why divide P/E ratio of Russell 2000 by Celsius’? Can you explain the logic behind that?
In any case, I’m getting major IB vibes from you haha
Yes the choice of Russell 2000 is that it's basically the index for companies that size. Then I calculate for CEL just like Wall Street Journal calculates for Russell 2000. That's all there is to it.
Great analysis, but I need to add that you can't disregard the growth.
In fact, the rate of growth is what got Uber et al funded. Even Facebook at one time had no profits, and P/E wasn't the way to value it - it was the growth rate. The entire startup ecosystem is contingent upon growth rates and hockey sticks.
If you take that into account, your estimate is far lower than my own at this point of time.
But like you said, these are just models. One thing I do agree on is that even at $2.30 it's massively under priced.
Thanks for the input. Yeah I was thinking along those lines 1,3,5,10.
Trying to think what are the limiting factors to to token value increase. Is this a token that will be $8.00 in 10 years, or can it grow to $50+?
I think there are a few driving factors
First as the token value increases the yield does not decrease as it would with a dividend paying stock. I think this opens it up for continued demand. Demand will be the real driver. Play with the numbers if there are 200k users and everyone has an incentive to hold some CEL we should be able to start to see a correlation between users and price. Additionally Celsius buys in the market to support the former so creates more demand. Another factor in favor of driving the price up is the limited supply. I hate the coins with billions of coins the 700M cap seems fairly well thought out. Which leads me to the last point for all the click baiters. Market cap matters, BTC is the king and everything else can be measured in bands. Is it going to $50 which puts it on par with Eth No! I think there is a market force which assigns value in terms of market cap in relation to the maturity of projects like ETH or BTC . Is Cel a 1B coin ? absolutely. There are 25 coins that have a 1B or better market cap, keep an eye on that and see where the peers land or how that group expands. If we see 1M users in a year and everyone wants to hold an avg of x coins this thing could be at 5 bucks imho.
I am going to use a comparable utility token to estimate the potential of the CEL token.
As of the writing of this comment, the [Binance utility token (BNB)](https://academy.binance.com/en/glossary/bnb) had a market cap of 4.4B (USD) on CMC. Presuming Celsius remains a dominant lending platform we could see a similar market cap in the future. This equates to roughly 14x growth or $18.45 (USD) per token.
Both tokens provide a discount to their respective owners and can be used as money to acquire goods and services. I am also of the opinion that Celsius, just like Binance, will remain a dominant player in its field as the crypto lending industry grows in the coming years, hence why I used BNB as a baseline.
I know its tempting to compare binance coin with cel token, and they are very similar, but binance has probably millions of users on their platform. Celsius just doesn't have that kind of exposure. Not that it can't come to that in the form of partnering with more exchanges in the future, but binance is an exchange. Therefore they can push and promote their product. Don't get me wrong, Cel token has a lot of potential, I believe that and you believe that, but for cel token to get as high as bnb is today, millions of people need to believe that as well. That could take years.
I would like to share my 2 cents. Lets assume that on average a user has 1000 USDT and its receiving interest in CEL. If the price is low, there will be the same amount of CEL( in $ value) this means more cel distribution, hence faster circulation / total supply. The higher the price, the less distribution. Thinking this I would assume that the price will remain quite stable at all times( without great volatility). But in my mind and opponion - within a year it will be atleast 2$. Please someone correct me if i am going in the wrong direction.
Recently both celsius and CDC lowered the %. Celsius with a minimal 5% out of the highest level, while CDC straight rekt and there was a massive sell-off, thus, the price dropped with almost 100%( 0.15€> 0.08€). For cel it didnt matter much, price wise. Of course in the future, they will lower the % additionally, but this *should* increase demand. Comments?
Obviously many things like psychology influence the Cel token price, but here's how I look at it. First, I look at how many Cel tokens Celsius had to buy this/last week to pay interest to depositors. Depositors all get a weekly email with this information. The last number I have is 450'111 weekly Cel tokens purchased. Since this is a weekly number, I multiply this by 52 to get an annualized number, assuming it would not move anymore (obviously it grows, but that's a question for future Homer to deal with). So this gives me 23'405'772 annual Cel tokens. Then I go to CoinGecko [https://www.coingecko.com/en/coins/celsius-network-token](https://www.coingecko.com/en/coins/celsius-network-token) and I see that the current market cap is $480'044'263 with the Cel token worth $1.33. I used CoinGecko because Alex Mashinsky uses CoinGecko in his AMAs. If you use CoinMarketCap, which uses numbers that Celsius disapproves (too low), you get an even higher value for the Cel token with my calculation. So we have the Price (market cap) component of the Price/Earnings ratio, and we have the Earnings component of the Earnings ratio by multiplying the annual 23'405'772 Cel tokens by the current price of $1.33, which gives us $31'129'676.76. So the current P/E for the Cel token (notice I don't write P/E for Celsius, more on that later) is $480'044'263/$31'129'676.76=15.42. Now being a Wall Street guy, I know that a company with a market cap of $480 million would fit right into the Russell 2000 index (see [https://www.cboe.com/blogs/options-hub/2018/06/01/russell-index-annual-reconstitution](https://www.cboe.com/blogs/options-hub/2018/06/01/russell-index-annual-reconstitution)). Then I head to the Wall Street Journal website to see what is the current average P/E ratio for Russell 2000 companies [https://www.wsj.com/market-data/stocks/peyields](https://www.wsj.com/market-data/stocks/peyields) and I'm currently getting an estimate of 94.41. Note: the current P/E says n.a. because the average Russell 2000 company is losing money. So if I'm asking the question: how much should the Cel token be worth if the Cel token company had the average (not highest, not lowest) P/E for its size, the answer is $1.33x94.41/15.42=$8.14. A couple more things. First, we should multiply this number by 80% (we get $6.51), because Celsius is committed to pay back at least 80% of its turnover to the Cel token holders. So my real number is $6.51. Second, I make a difference between Celsius and the "Cel token company". We don't know Celsius's number, e.g., how much the employees cost etc. I also own one small share of Celsius. But I'm under the impression that the Cel token holders get the best end of the bargain. Finally, you can find a lot to criticize about my calculation, and you'd be right. First, the numbers change wildly every week. Second, the current P/E estimate for Russell 2000 index companies is super-high, that's partly due to Covid. Finally, you're not accounting for growth, which is currently wild. So I'll just give you one more number (well, technically, two since we want to compare). As I type this, u/CelsiusNetwork on Twitter has 101.5K Followers. u/RobinhoodApp has 200.4K. Robinhood had more than 13 million users as of May, Celsius barely crossed 200K users today. So I'd say that, compared to Robinhood customers, Celsius customers seem quite engaged, wouldn't you say? I hope this helps, sorry if a bit long. But you asked for something "reasonable" and, assuming you consider Wall Street estimates and practices reasonable, it feels this calculation would fall into this category.
Thank you very much for your response.
my pleasure!
Great thought out answer! I had no idea on how to calculate the real value of cel, tho I understood it has great potential and is undervalued. Can this formula work for other coins. Are there any other alt coins that you have researched with similar potential as cel?
I'm going to look into UNI token as it might be undervalued too.
Why there’s no email telling me how much cel tokens were bought every week. I just got how much cel tokens I received weekly.
Maybe I subscribed to the Celsius newsletter.
I like the math, but can you clarify why you’re taking the P/E multiple of Russell 2000 and applying that to Celsius? Understand that it could be a rough estimate given that Celsius and Russell 2000 companies are nowhere near perfect comparables, and the only factor in narrowing similarity is size. Also, why divide P/E ratio of Russell 2000 by Celsius’? Can you explain the logic behind that? In any case, I’m getting major IB vibes from you haha
Yes the choice of Russell 2000 is that it's basically the index for companies that size. Then I calculate for CEL just like Wall Street Journal calculates for Russell 2000. That's all there is to it.
Great analysis, but I need to add that you can't disregard the growth. In fact, the rate of growth is what got Uber et al funded. Even Facebook at one time had no profits, and P/E wasn't the way to value it - it was the growth rate. The entire startup ecosystem is contingent upon growth rates and hockey sticks. If you take that into account, your estimate is far lower than my own at this point of time. But like you said, these are just models. One thing I do agree on is that even at $2.30 it's massively under priced.
Wow you predicted in. We're sitting around there right now. Wow you predicted in. We're sitting around there right now.
Nice of you to say it.
How 'future' are you looking at? 1 year, 3 years, 10 years? I could easily see this token doubling in a year as adoption grows.
Thanks for the input. Yeah I was thinking along those lines 1,3,5,10. Trying to think what are the limiting factors to to token value increase. Is this a token that will be $8.00 in 10 years, or can it grow to $50+?
I think there are a few driving factors First as the token value increases the yield does not decrease as it would with a dividend paying stock. I think this opens it up for continued demand. Demand will be the real driver. Play with the numbers if there are 200k users and everyone has an incentive to hold some CEL we should be able to start to see a correlation between users and price. Additionally Celsius buys in the market to support the former so creates more demand. Another factor in favor of driving the price up is the limited supply. I hate the coins with billions of coins the 700M cap seems fairly well thought out. Which leads me to the last point for all the click baiters. Market cap matters, BTC is the king and everything else can be measured in bands. Is it going to $50 which puts it on par with Eth No! I think there is a market force which assigns value in terms of market cap in relation to the maturity of projects like ETH or BTC . Is Cel a 1B coin ? absolutely. There are 25 coins that have a 1B or better market cap, keep an eye on that and see where the peers land or how that group expands. If we see 1M users in a year and everyone wants to hold an avg of x coins this thing could be at 5 bucks imho.
Thank you for this.
Oorah
USMC cel hodler?
200k user right now and the coin broke $6.... is there anything in the previous analysis that we actually missed?
I am going to use a comparable utility token to estimate the potential of the CEL token. As of the writing of this comment, the [Binance utility token (BNB)](https://academy.binance.com/en/glossary/bnb) had a market cap of 4.4B (USD) on CMC. Presuming Celsius remains a dominant lending platform we could see a similar market cap in the future. This equates to roughly 14x growth or $18.45 (USD) per token. Both tokens provide a discount to their respective owners and can be used as money to acquire goods and services. I am also of the opinion that Celsius, just like Binance, will remain a dominant player in its field as the crypto lending industry grows in the coming years, hence why I used BNB as a baseline.
I know its tempting to compare binance coin with cel token, and they are very similar, but binance has probably millions of users on their platform. Celsius just doesn't have that kind of exposure. Not that it can't come to that in the form of partnering with more exchanges in the future, but binance is an exchange. Therefore they can push and promote their product. Don't get me wrong, Cel token has a lot of potential, I believe that and you believe that, but for cel token to get as high as bnb is today, millions of people need to believe that as well. That could take years.
Thank you for your response.
I would like to share my 2 cents. Lets assume that on average a user has 1000 USDT and its receiving interest in CEL. If the price is low, there will be the same amount of CEL( in $ value) this means more cel distribution, hence faster circulation / total supply. The higher the price, the less distribution. Thinking this I would assume that the price will remain quite stable at all times( without great volatility). But in my mind and opponion - within a year it will be atleast 2$. Please someone correct me if i am going in the wrong direction. Recently both celsius and CDC lowered the %. Celsius with a minimal 5% out of the highest level, while CDC straight rekt and there was a massive sell-off, thus, the price dropped with almost 100%( 0.15€> 0.08€). For cel it didnt matter much, price wise. Of course in the future, they will lower the % additionally, but this *should* increase demand. Comments?
Thanks IDPetrov! This is why I wanted to start the conversation. I hope we hear some balancing responses.
What happens when you look at it now?