Virtu Financial, Inc. (VIRT): A Bull Case Theory 

We came across a bullish thesis on Virtu Financial, Inc. on X.com by secretlyaninja. In this article, we will summarize the bulls’ thesis on VIRT. Virtu Financial, Inc.’s share was trading at $34.32 as of December 2nd. VIRT’s trailing and forward P/E were7.60 and 8.63 respectively according to Yahoo Finance.

Virtu Financial, Inc. operates as a financial services company in the United States, Ireland, and internationally and has recently become an attractive opportunity following a sharp 26% decline over the past three months, driven by the retirement of its well-regarded CEO and low third-quarter EPS estimates. Trading at a P/E of roughly 7x, near a five-year low, the market appears to have overreacted. VIRT, an electronic market maker, earns primarily through bid/ask spreads rather than directional bets, making its profitability dependent on trading volume and spread size.

Despite market concerns, the new CEO, formerly CTO, is deeply familiar with VIRT’s proprietary algorithms, positioning him well to lead the company, and investor apprehensions should ease once he presents at 3Q earnings. Additional pressure on the stock came from a 144 filing indicating the former CEO’s potential sale of ~918K shares; however, this represents only ~$30 million versus a market cap over $5 billion, and the sale has not yet occurred, suggesting limited immediate impact.

Analyst concerns about 3Q earnings, currently pegged at $0.95, appear overly conservative. Despite low market volatility, trading volumes remained robust, particularly in profitable retail trades, suggesting actual EPS could reach ~$1.40, well above Street expectations. VIRT also benefits from strong shareholder returns, including a 0.96 annual dividend and significant buybacks, with a recent $300 million tender offer likely enhancing future value.

On a mid-cycle basis, P/E stands at just 8.1x, highlighting the stock’s deep undervaluation. Near-term catalysts include investor acclimation to the new CEO, absence of large insider selling, potentially strong 3Q earnings, and a significant 4Q stock buyback. Overall, VIRT represents a low-risk, high-upside investment with multiple re-rating opportunities.

Previously we covered a bearish thesis on MarketAxess Holdings Inc. (MKTX) by Dan in November 2024, which highlighted the company’s overvaluation, pressures in its U.S. markets, and challenges in portfolio and block trading. The stock has depreciated approximately 39.86% since our coverage. The thesis still stands as these issues persist. secretlyaninja shares a contrarian view but emphasizes Virtu Financial’s (VIRT) undervaluation and near-term re-rating catalysts.

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Disclosure: None.