Nasdaq Lands Crypto-Bank IPO Amid Overvaluation and Leverage Concerns

What happened

Old Glory Bank and Digital Asset Acquisition Corp. announced a business combination to create a Texas-based company publicly listed on Nasdaq, with Old Glory Bank aiming to be the first chartered bank to fully integrate crypto into daily banking. This event underscores Nasdaq's entrenched role as a leading U.S. IPO venue, reinforcing its network effects in listings and capital access platforms. However, the DeepValue master report highlights that Nasdaq is trading at rich valuations—approximately 33 times earnings and 25 times EV/EBITDA—with elevated leverage of 3.8x net debt/EBITDA, leaving little room for error. The company's strategic pivot towards higher-margin solutions and RegTech, including acquisitions like Adenza and Verafin, faces execution risks and macro sensitivity that could impair growth. Thus, while this listing adds to Nasdaq's robust track record, it does not materially alleviate the core financial and valuation challenges identified in the analysis.

Implication

The Old Glory Bank listing strengthens Nasdaq's appeal to innovative fintech and crypto-focused companies, potentially attracting similar future IPOs and supporting its capital access segment. However, a single listing is unlikely to significantly impact Nasdaq's overall revenue or alter the cyclical nature of its listings business, which remains exposed to macro conditions. Investors should recognize that Nasdaq's current valuation embeds optimistic assumptions about sustaining 8-11% organic Solutions growth, and this event does not address the elevated leverage or integration challenges from recent acquisitions. Critical watch items from the DeepValue report, such as deleveraging below 3x net debt/EBITDA and consistent delivery on growth targets, remain unchanged and essential for risk management. Ultimately, while the news highlights Nasdaq's franchise strength, it offers no margin of safety against potential downside from overvaluation or operational missteps.

Thesis delta

The news does not alter the 'POTENTIAL SELL' thesis from the DeepValue report, as it confirms Nasdaq's listings moat but fails to address the core investment concerns. It underscores the company's ability to attract innovative listings, yet the overvaluation at ~33x P/E and leverage of 3.8x net debt/EBITDA persist, maintaining the risk/reward skew toward downside. Therefore, the recommendation to avoid adding and consider trimming exposure remains valid, pending improvements in financial metrics and execution.