Miami International Holdings: Is the Rally Sustainable or a Valuation Bubble?

Miami International Holdings (MIAX) has emerged as a standout performer in the capital markets sector, with its shares surging following a strong third-quarter 2025 report. However, beneath the surface of its impressive revenue growth and improved profitability lies a valuation puzzle: while some metrics suggest undervaluation, others point to a potential overextension. This article examines the tension between MIAX's robust fundamentals and conflicting valuation signals, asking whether the recent rally is a well-founded bet on the company's future or a speculative bubble.

Fundamentals: A Story of Resilience and Growth

Miami International Holdings delivered a stellar Q3 2025 performance, with net revenue jumping 57% year-over-year to $109.5 million. Adjusted earnings soared nearly fivefold to $39.9 million, while adjusted EBITDA more than doubled to $48.0 million, with margins expanding to 44% from 27% in the prior year. These gains were driven by the company's options segment, which generated $94.5 million in revenue-a 55% increase year-over-year.

Despite a GAAP net loss of $102.1 million, largely attributable to one-time charges like debt extinguishment and IPO-related expenses, MIAX's balance sheet remains a fortress. The company ended the quarter with $401.5 million in cash and cash equivalents and a mere $6.5 million in total debt. This financial flexibility, combined with its strong operating performance, underscores MIAX's ability to navigate market volatility and fund future growth.

Valuation Divergence: P/S Ratio vs. Excess Returns Model

The company's valuation story, however, is far less clear-cut. On one hand, MIAX's Price-to-Sales (P/S) ratio of 2.68x to 2.89x appears attractive when compared to industry benchmarks. This metric is significantly below the Capital Markets industry average of 3.83x and the peer group average of 14.2x. Such a discount suggests that investors are pricing MIAX's revenue at a steep discount to its peers, potentially overlooking its strong cash flow generation and market position.

On the other hand, more sophisticated valuation models paint a starkly different picture. The Excess Returns model, which incorporates metrics like book value and stable earnings per share (EPS), estimates MIAX's intrinsic value to be 233% to 467% below its current share price. Similarly, a discounted cash flow (DCF) analysis calculates a fair value of $12.85 per share, well below the stock's current trading price. These models imply that MIAX is overvalued by a wide margin, as the market appears to be pricing in unrealistic growth expectations that may not materialize.

Reconciling the Contradictions

The disconnect between MIAX's fundamentals and valuation metrics stems from differing assumptions about the company's growth trajectory. The P/S ratio, a simple multiple that focuses on revenue, benefits from MIAX's strong top-line performance and low valuation relative to peers. However, it does not account for profitability, growth prospects, or risk factors. In contrast, the Excess Returns and DCF models incorporate forward-looking assumptions about cash flows and risk-adjusted returns, which may not align with the market's current optimism.

For instance, MIAX's adjusted EBITDA margin expansion and robust cash reserves could justify a premium valuation if the company can sustain its growth. Yet, the Excess Returns model's stark overvaluation warning suggests that the market is pricing in a level of future returns that may be difficult to achieve, particularly given the company's recent one-time expenses and the competitive nature of the capital markets sector.

Conclusion: A Cautionary Bull Case

Miami International Holdings' Q3 results demonstrate its operational strength and financial resilience, making it a compelling story for investors. However, the valuation debate highlights a critical risk: while the P/S ratio suggests undervaluation, intrinsic value models indicate that the stock may already be priced for perfection.

For the rally to be sustainable, MIAX must continue to deliver on its growth trajectory, particularly in its high-margin options segment, while managing expectations around profitability. Investors should also monitor how the market reacts to future earnings reports and macroeconomic conditions, which could either validate or challenge the current valuation premium.

In the end, MIAX offers a textbook example of the tension between fundamental performance and market sentiment. While its fundamentals are undeniably strong, the valuation gap between the P/S ratio and intrinsic value models serves as a cautionary note. For now, the rally appears partially justified but remains vulnerable to overextension if growth expectations outpace execution.