The short version
- Hyperliquid Strategies earnings: Q3 net income was $620.6 million, but $803 million of it was a paper gain on HYPE, and HYPE is down about 14% since September 30.
- A subsidiary applied to become a futures commission merchant (FCM) to carry US accounts for permissioned markets on Hyperliquid, with no timeline given.
- PURR fell 9.6% to $8.76, about 0.80 times the HYPE and cash behind each share.
- Next: today’s scheduled HYPE unlock, and whether PURR holds its $7.78 200-day average.
“Those two moves are the same bet.” That is how David Schamis, CEO of Hyperliquid Strategies (Nasdaq: PURR), summed up a quarter in which the largest HYPE treasury company spent $802 million and applied to become a US futures broker.
The Hyperliquid Strategies earnings for the quarter to September 30 came out on November 5, in an 8-K filed with the SEC. The quick run-down:
1. Net income was $620.6 million, and almost all of it was an $803 million paper gain on HYPE. 2. The treasury grew from 29.3 million to 38.5 million HYPE during the quarter. 3. A subsidiary has applied to become a futures commission merchant (FCM) for US traders on Hyperliquid. 4. PURR still trades below the HYPE and cash behind each share.
Two days before the results, Schamis wrote that the CFTC’s view on single-stock perps was “a real step toward bringing Hyperliquid onshore”:
This has come up in a lot of my conversations over the past year. I’m not an expert on what’s a future vs. a swap, but the people whose call it is have now made it, at least for single-stock perps on dual-registered exchanges. A real step toward bringing Hyperliquid onshore.
Hyperliquid Strategies Earnings: Where Did the $620.6M Come From?
Mostly from the HYPE price. Treasury companies value their tokens at the market price every quarter, so a rising token shows up as profit even when nothing is sold. HYPE went from $65.04 on June 30 to $90.99 on September 30, and that produced the $803.0 million unrealized gain.
The cash income is much smaller. Staking revenue and validator commissions brought in $12.3 million, and interest another $1.0 million, against $7.6 million of running costs.
The fuel was new shares. The company raised $911 million by selling PURR stock under its committed equity facility, at an average of 1.15 times the value of its assets per share. It spent $785 million on 9.1 million HYPE at an average of $86.44, and $17 million on buying back 2.7 million of its own shares at $6.36.
Here is the catch in the Hyperliquid Strategies earnings. HYPE is $78.16 at the time of writing, about 14% under the September 30 price. On 38.5 million tokens, that is roughly $494 million of the quarter’s paper gain already gone.
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What Is the Hyperliquid Strategies FCM Application For?
An FCM, or futures commission merchant, is the US broker that holds customer money and accounts for futures trades. Hyperliquid Strategies wants one so it can carry US client accounts for “permissioned” markets on Hyperliquid.
Those markets come from a planned upgrade called HIP-3*. A regulated exchange and clearing house would run its own markets on Hyperliquid, open only to verified users on an onchain allowlist, while the chain itself stays neutral.
It fits a busy two weeks. On October 26, Payward, Kraken’s parent, said it wants to be the first CFTC-regulated deployer on HIP-3*. Three days later, ICE, the owner of the New York Stock Exchange, signed on to run trade.xyz’s planned US markets, with verified customers coming in through FCMs that join ICE’s clearing.
Intercontinental Exchange (ICE) and trade[XYZ] have announced their plan to use Hyperliquid as the infrastructure layer to deploy perpetual futures markets for US traders across crypto, equities, commodities, foreign exchange, and other real-world assets, subject to regulatory
None of it is approved yet. The filing says there is no assurance on the timing or outcome of the application, and no date was given.
SIDE TRAIL: Hyperliquid Strategies Triples Buyback to $100M as PURR Trades Below Its HYPE
PURR Stock Price: Why Is It Below Its HYPE?
PURR closed at $8.76 on Thursday, down 9.6% on a day the Nasdaq 100 fell 6.4%. Earlier in the session it touched $7.99, its lowest price since August 19. The results came after the close; PURR was at $9.06 before Friday’s open.
Now the sum. The company’s dashboard lists 38.87 million HYPE, $245.35 million in cash and 300.77 million shares. At today’s HYPE price, each share holds about $10.10 of HYPE plus $0.82 of cash, so $10.92 in all.
At Thursday’s $8.76 close, PURR traded at about 0.80 times that, and still only 0.83 times at Friday’s early $9.06. That ratio is the PURR mNAV (market value divided by net asset value). Count the tax the company would owe on its gains and it is closer to 0.87 times. Under its own treasury framework, a ratio below target is the signal to buy back shares rather than sell new ones.
On the chart, PURR sits well under the 50-day moving average at $11.30 but still above the 200-day at $7.78. A daily close back above $12.33, the October 29 high on the ICE news, would show buyers returning. A close under $7.78 would put the stock below its 200-day average, and that line has caught every dip so far.
TRAIL MAP: HYPE Unlock on November 6: $765M on Paper. Can Buybacks Absorb It?
What decides PURR from here is still HYPE. The company owns 38.87 million of them, and nothing else on its balance sheet comes close.
TANG has been trading crypto since 2017. The focus is technicals, DeFi and onchain data. On the chart, that means high-timeframe support, moving averages and momentum divergences. Onchain, it means regular checkups on where the data puts the cycle. TANG once ran CryptoJungle, a free community for researching and trading together, and brings that same spirit to Base Camp as one of its co-founders.
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