Use the xRev valuation method to lurk in the next doubling market
Source: Delphi Digital Author: @that1618guy编译及整理: BitPushNews When sifting through agreements, I've been thinking about the question: If a business relies on its revenue to help you recoup all of your investment in less than 2 years, what exactly is stopping you from buying it? The answer is almost never the revenue itself, but whether you believe it's sustainable. This is what the XRev multiple (market capitalization divided by annualized revenue) really measures. It's not cheap or not, it's durable (durable). Two real-life cases illustrate this very well. The trailing multiples currently selected by PUMP and AERO are in the low single-digit range, 2.3 times and 3.5 times, respectively. Over the past 30 days, PUMP has risen 87%, while AERO has declined 14.5%. The same screening metrics, but the exact opposite results. In June of this year, the market priced PUMP 1.3 times — meaning the market doubts that the agreement won't even be able to sustain current revenue for 16 months. This doubt was dispelled in July, and the subsequent revaluation (re-rate) completed all the upward drive. AERO is like a mirror: it has tripled since its high price in December 2024, not because some people are more optimistic about it, but because its revenue is declining faster than the market is repricing. If this framework is established, then the trading logic would not be “buy the lowest multiple”, but “buy the multiple that doubt will soon disappear.” When a suspected revenue stream is proven to be durable, even if revenue is overtaken, the revaluation will take on the burden of driving the rise. What exactly does xRev measure xRev is simple: market capitalization divided by annualized revenue. At 1.0 times, the revenue from the agreement can pay back its entire market value within a year. Less than 1.0 times, the payback is faster. The most immediate instinctive interpretation of such numbers is a “pricing error.” But the correct interpretation is: the market is putting huge “durability discounts” on it. The market is telling you that it thinks this kind of revenue is just a fleeting thing, and once it falls, it will never come back. So a compressed XRev itself isn't a buying signal... it's more of a “statement of no confidence.” The alpha (excess revenue) of these is figuring out whether this distrust is right or wrong. Before entering the case study, we also need to make a distinction, because the initial multiplier position of the token determines what kind of transaction it can evolve into. We can split it into two buckets. Bucket A (Bucket A) tokens are “cheap at birth”: A new protocol found product-market matches (PMF) in areas with extremely high rates, and revenue exploded before anyone believed it would last, so XRev launched at around 1x or less. High income, small market capitalization, and great doubt. The market capitalization is low for only one reason: the market hasn't bought up its revenue story, making them candidates for “belief revaluation.” Bucket B (Bucket B) tokens are “expensive at birth”: the market has been pricing them as future revenue giants since day one, so XRev was initially very high, and the belief was already pre-paid. There are no doubts that can be purchased; only expectations need to be defended. AERO's release belongs entirely to bucket A. The release of PUMP belongs entirely to barrel B. The next sections let's take a look at what happened to each of them. PUMP: Barrel B buys PUMP at its premium is typical of barrel B. The token stemmed from a $1 billion round of financing, and the ICO gave a fully diluted valuation (FDV) of $4 billion, equivalent to more than 9 years of annualized revenue generated by the agreement at the time, and opened at 4.5 times the circulating supply. Faith has already been paid for in advance. Since then, it has taken the market a whole year to reclaim these prepaid beliefs. This was reasonable at the time: Memecoin's trading volume was cyclical, competitors were actively absorbing order flows, and no one was sure if the platform could maintain market share. You can see that the belief in prepayment is being lost from the XRev chart. While the agreement recorded gross revenue of more than $200 million for four consecutive quarters, the multiples continued to shrink for almost a full 11 months. Figure 1: XRev, 30-day revenue window since PUMP was launched. At this...
