With 18,991 BTC already held, the company aims for 100,000 BTC by 2026 but is now turning to overseas share offerings and preferred stock issuance to raise capital. Analysts warn the collapse of its “Bitcoin premium” from 8x to 2x heightens dilution risks, though Metaplanet’s recent upgrade to FTSE Japan’s mid-cap index offers somewhat of a silver lining.
Metaplanet, the Tokyo-listed firm known for its aggressive Bitcoin accumulation, is facing some financial strain as its share price continues to tumble. The company’s stock plunged by more than 50% since mid-June, even as Bitcoin was able to gain around 2% over the same period.
Metaplanet’s stock price over the past month (Source: Google Finance)
The sharp decline undermined Metaplanet’s capital-raising “flywheel” strategy, which relies on rising stock prices to unlock funding through MS warrants issued to Evo Fund, its key investor. With the current share price drop, exercising these warrants became unattractive for Evo, tightening Metaplanet’s liquidity and slowing down its Bitcoin acquisition drive.
Metaplanet is led by former Goldman Sachs trader Simon Gerovich, and it amassed 18,991 BTC. This makes it the seventh-largest public Bitcoin holder according to BitcoinTreasuries.NET. The company also set ambitious targets of holding 100,000 BTC by 2026 and 210,000 BTC by 2027. But with its existing strategy faltering, Gerovich is now looking for alternative funding sources.
Top public Bitcoin treasury companies (Source: BitcoinTreasuries.NET)
Last week, Metaplanet announced plans to raise roughly 130.3 billion yen ($880 million) through a public share offering in overseas markets. In addition, shareholders will vote on whether to approve the issuance of up to 555 million preferred shares, which could raise as much as 555 billion yen ($3.7 billion). Gerovich described the preferred shares as a defensive mechanism, offering capital without diluting common shareholders if the stock falls even more. The preferred stock is expected to carry up to 6% annual dividends and is initially capped at 25% of Metaplanet’s Bitcoin holdings, which may prove appealing to yield-hungry Japanese investors.
Despite these efforts, analysts warn that the success of Metaplanet’s strategy hinges on the “Bitcoin premium”—which is the difference between its market capitalization and the value of its Bitcoin holdings. That premium collapsed from over 8x in June to just 2x, raising concerns about future dilution.
The company already suspended Evo’s warrant exercises for most of September to facilitate the preferred share issuance. Whether this pivot will restore momentum to its funding model remains to be seen. Nonetheless, Metaplanet earned an upgrade from small-cap to mid-cap status in FTSE Russell’s September Semi-Annual Review, securing inclusion in the FTSE Japan Index after its strong second-quarter performance.
Source: https://coinpaper.com/10815/metaplanet-faces-funding-strain-as-stock-tumbles
