Investment Thesis — Cboe Global Markets, Inc.
The market misprices Cboe by viewing it as a mature financial utility, overlooking its unique position to capitalize on the structural, compounding growth in global derivatives and options trading. This underestimation of its long-term earnings power creates an opportunity for multiple expansion.
Catalysts
- Sustained acceleration in global derivatives and options trading volumes.
- Successful expansion of proprietary product suite into new markets or asset classes.
- Accretive M&A activity bolstering market share or technological capabilities.
Risk Factors
- Adverse regulatory changes impacting derivatives or exchange operations.
- Prolonged global market downturn leading to reduced trading volumes.
- Intensified competition from rival exchanges or new market entrants.
Key Debates
Fwd Rev Growth recovers from -44.9% by Q3, re-rating P/E.
VIX ADV growth accelerates 10% by H2, boosting transaction revenue.
Recurring revenue mix improves, justifying 28x P/E by Q1 2025.