Metaplanet Stock Falls 54% as Bitcoin Funding Strategy Faces Crisis

TLDR

• Metaplanet (3350.T) stock has plunged 54% since mid-June while Bitcoin gained 2%, breaking their fundraising model
• The company’s share-based “flywheel” strategy with MS warrants is failing as stock price drops make warrant exercises unattractive
• Metaplanet holds 18,991 BTC and aims to reach 100,000 BTC by end of 2026 and 210,000 BTC by 2027
• Company plans to raise $880 million through overseas share offering and potentially $3.7 billion through preferred shares
• Bitcoin premium has collapsed from over 8x in June to just 2x, raising dilution risks for the strategy

Metaplanet’s aggressive Bitcoin accumulation strategy is hitting turbulence as the Tokyo-listed company’s stock price collapse threatens its unique fundraising model. The firm’s shares have crashed 54% since mid-June while Bitcoin itself gained around 2% during the same timeframe.

This divergence has broken what the company calls its “flywheel” strategy. The mechanism relies on rising share prices to make MS warrants attractive to exercise by Evo Fund, Metaplanet’s key investor.

With the stock in freefall, those warrants are no longer appealing to Evo. This has squeezed Metaplanet’s liquidity and slowed its Bitcoin buying spree.

Former Goldman Sachs trader Simon Gerovich leads the company’s Bitcoin strategy. Under his direction, Metaplanet has built a treasury of 18,991 BTC.

This makes it the seventh-largest public Bitcoin holder according to BitcoinTreasuries.NET. The company has set ambitious targets of 100,000 BTC by end of 2026 and 210,000 BTC by 2027.

But reaching those goals now requires a funding pivot. Gerovich is scrambling to find alternative capital sources as the original strategy falters.

New Funding Routes Under Pressure

On Wednesday, Metaplanet announced plans to raise approximately 130.3 billion yen ($880 million) through a public share offering in overseas markets. This represents a shift away from domestic Japanese funding sources.

Shareholders will vote Monday on approving the issuance of up to 555 million preferred shares. This rare financial instrument in Japan could raise as much as 555 billion yen ($3.7 billion).

Gerovich described the preferred shares as a “defensive mechanism” in a Bloomberg interview. The structure allows capital infusion without diluting common shareholders if the stock continues falling.

These preferred shares are expected to offer up to 6% annual dividends. They would initially be capped at 25% of the firm’s Bitcoin holdings value.

The high yield could appeal to Japanese investors who have been starved of decent returns. Japan’s ultra-low interest rate environment has left income-seeking investors with few options.

Premium Collapse Raises Stakes

The success of Metaplanet’s entire strategy hinges on maintaining what analysts call the “Bitcoin premium.” This measures the difference between the company’s market cap and the actual value of its Bitcoin holdings.

This compression increases dilution risks for existing shareholders. If the premium continues falling, new share issuances become increasingly costly for current investors.

The company has suspended Evo’s warrant exercises from September 3 to 30. This move clears the path for the preferred stock issuance to proceed.

Whether this funding shift can stabilize Metaplanet’s strategy remains uncertain. The company is essentially betting it can access alternative capital markets while its domestic funding model repairs itself.

The preferred share vote on Monday will be a key test of investor confidence. Approval would give Metaplanet access to massive funding but could also signal desperation to some market observers.

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