Metaplanet is raising $150 million to fund more Bitcoin purchased by issuing convertible stock to fund the purchase of more Bitcoin.
The company’s current holdings stand at roughly $2.67 billion. However, its last major inflow was Sept 29 amid a stock price collapse.
Metaplanet’s dark streak
Metaplanet’s strategy depended heavily on a “flywheel”: issue equity (or warrants) when the share price is high, raise money, and use that to buy more Bitcoin.
When the stock dropped, warrant exercises became less attractive. That funding channel has weakened significantly.
Without that equity-based capital, its aggressive BTC acquisition strategy is under stress.
To raise fresh capital, Metaplanet proposed issuing up to 555 million preferred shares, which is huge and comes with dividend commitments. It also raised funds via an overseas share sale.
Investors are worried because more shares mean dilution, and if those shares don’t translate to value (or Bitcoin returns), the downside is real.
Metaplanet’s “market-based net asset value” (mNAV), which compares the company’s market cap to the value of its Bitcoin treasury, has dropped. At one point, mNAV was just 0.88, meaning the market was valuing the company at less than the value of its Bitcoin holdings.
The company’s stock is down by 62% over the past two months.