Bitcoin Depot (BTM): Profitability Gains Amid Regulatory Tailwinds – A Buy at a Discounted P/E?

Bitcoin Depot Inc. (NASDAQ: BTM), a leading operator of Bitcoin ATMs in North America, is emerging as a compelling investment opportunity as it navigates a shifting regulatory landscape and expands its kiosk network. Despite persistent operational challenges, the company's recent financial turnaround, strategic partnerships, and undervalued stock metrics suggest a “Buy” recommendation for investors willing to tolerate near-term volatility.

Undervalued Stock: A P/E Ratio at Historical Lows

Bitcoin Depot's stock trades at a deeply discounted price-to-earnings (P/E) ratio, even as its financial performance improves. As of July 2025, the company's trailing twelve-month (TTM) P/E stands at -37.10, reflecting its recent shift from losses to modest profitability. While negative P/E ratios typically signal unprofitability, Bitcoin Depot's latest quarterly results show progress: in Q1 2025, net income surged to $12.2 million, reversing a $4.2 million loss in the same period a year earlier.

The forward P/E ratio, which projects earnings into 2026, currently sits at 11.78, far below the crypto industry's average of 21.63. This suggests the stock is undervalued relative to peers like Coinbase (COIN), which trades at a P/E of 34.34. Analysts project Bitcoin Depot's earnings to grow steadily, with a $0.46 EPS in 2025 and $0.51 in 2026, implying a potential return to sustained profitability.

The company's valuation is further bolstered by its $43.3 million in cash and a $16.3 million operating cash flow in Q1 2025—both critical for fueling expansion and reducing debt. While the P/E's negative value remains a red flag, the trajectory toward profitability and the forward-looking valuation metrics argue for patient investors to take a position.

Strategic Expansion: Kiosk Optimization and International Growth

Bitcoin Depot's core asset is its 8,483 Bitcoin ATMs across North America, with plans to expand to 10,000 kiosks by year-end. The company has optimized its network through strategic partnerships, such as the acquisition of Pelicoin, LLC, and franchise agreements with retailers like CEFCO and EG America LLC. These deals reduce capital expenditures while increasing transaction volumes: the median transaction size rose to $300 in Q1 2025, up 46% year-over-year.

The rollout of BDCheckout, a cash-to-crypto service available at checkout counters, further diversifies revenue streams. By Q1 2025, BDCheckout was active in 10,926 retail locations, reducing the need for upfront hardware costs. Internationally, Bitcoin Depot is targeting Australia—a market with 100 new kiosks—and other regions, capitalizing on underpenetrated markets.

Regulatory Tailwinds: A Shift in Favor of Crypto Adoption

The Trump administration's regulatory reforms have created a favorable environment for Bitcoin Depot. FDIC guidelines now permit banks to offer crypto services, while the SEC's policy overhaul has reduced compliance hurdles for firms like BTM. Most notably, an executive order establishing a crypto reserve aims to stabilize the market, reducing volatility and boosting adoption.

These changes contrast sharply with previous regulatory uncertainty, which hampered growth. With Bitcoin Depot positioned as a regulated, compliant player in the crypto ecosystem, it stands to benefit disproportionately from these tailwinds.

Risks to Consider

While Bitcoin Depot's fundamentals are improving, risks remain. Legal challenges, such as the Iowa Attorney General's lawsuit over consumer protection claims, could divert resources and damage reputation. Competitors like Coinbase (COIN) and smaller players like BTCS (BTCS) also threaten market share.

Operational costs remain a concern: expenses rose 26.5% in 2023 and continue to grow, squeezing margins. Additionally, Bitcoin's price volatility directly impacts transaction volumes, though the company's focus on recurring revenue streams (e.g., fees per transaction) mitigates this risk to some extent.

Conclusion: A “Buy” with an Eye on the Long Game

Bitcoin Depot's combination of strategic expansion, improving profitability, and regulatory tailwinds positions it as a high-reward, moderate-risk investment. While near-term challenges like litigation and costs are valid concerns, the company's valuation, cash reserves, and growth trajectory justify a “Buy” rating.

Investors should monitor Q2 2025 results, due August 19, 2025, for further earnings momentum. A target price of $5.23 (based on analyst estimates) suggests upside potential of ~40% from its July 2025 price of $3.72.

In a sector prone to volatility, Bitcoin Depot's focus on network optimization, international growth, and compliance offers a disciplined path to profitability. For investors willing to look past short-term noise, BTM presents a compelling opportunity to capitalize on the crypto ATM boom.

Disclosure: This analysis is for informational purposes only and does not constitute financial advice. Always conduct independent research before making investment decisions.