Matthew Siegel, a cryptocurrency researcher at VanEck, said that listed companies that purchase Bitcoin should be prepared to cancel more purchase plans if the value of the Bitcoin they hold exceeds their market value. If the stock price drops significantly, these companies should consider giving up the strategy of purchasing Bitcoin completely.
Siegel said in an X post on Monday that some companies are raising funds to purchase Bitcoin through large-scale exchange-traded (ATM) programs, and now risks are emerging. If stocks are traded at or near the net asset value (NAV), continuous stock issuance may dilute value rather than create it. He also pointed out that currently no listed company’s share price has been consistently lower than its net asset value in Bitcoin, but Semler Scientific, Inc. is close to this situation. This company is a medical technology firm. It first purchased Bitcoin in May 2024. Currently, the 3,808 Bitcoins it holds are worth 404.6 million US dollars, ranking 13th among listed companies.
This year, the price of Bitcoin has repeatedly hit new highs. However, as of the close of trading last Friday, the share price of Semler Corporation has dropped by more than 45% compared to the beginning of the year, falling to the level when the company initially purchased Bitcoin, and its market value has also dropped to approximately 434.7 million US dollars. According to the data from Coin Kite, the price-to-book ratio (m_nav) of Semler Company has dropped below 1, approximately 0.821 times.
Siegel warned that given the returns are not always achievable, Bitcoin buying companies “should take protective measures now while the premium still exists.” He suggested that companies that invest heavily in Bitcoin should suspend their on-exchange fundraising plans if the trading price of their stocks is lower than 0.95 times the net asset value for at least 10 days. When Bitcoin appreciates but the company’s stocks fail to reflect that value, these companies should also “prioritize stock buybacks”. Finally, Siegel stated that if the discount in net asset value persists, the company should “initiate a strategic review”, which may include merging, splitting off or terminating the Bitcoin investment strategy.
Furthermore, Siegel also said that Bitcoin-purchasing companies should link executive compensation to the growth of net asset value per share, rather than to the holdings of Bitcoin or the total number of shares. He once again urged the company’s leaders to “act strictly now while they still have a choice”. Once a company’s stocks are traded at net asset value, the dilution of shareholders’ equity is no longer strategic but exploitative.
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