Nakamoto, a subsidiary of KindlyMD, has made a significant commitment of up to $30 million to participate in Metaplanet’s global equity offering. This investment represents Nakamoto’s largest to date and marks its initial foray into an Asian public company that employs a Bitcoin-focused treasury strategy. The funding is expected to finalize on September 16, with shares being delivered the following day.
In the wake of this announcement, Metaplanet disclosed that it has acquired an additional 136 BTC for approximately $15.2 million, which boosts its total Bitcoin holdings to 20,136 BTC. This places Metaplanet as the sixth-largest public company globally in terms of Bitcoin reserves. The firm, listed on the Tokyo Stock Exchange, is preparing to issue 385 million new shares with the aim of raising about $1.4 billion, primarily to further increase its Bitcoin holdings.
In a prior meeting, shareholders at Metaplanet approved a plan to issue 550 million new shares, with an expected raise of around 130.3 billion yen (approximately $884 million). The company has confirmed that a significant portion of the proceeds from these new share issues will be allocated for cryptocurrency purchases. This strategic shift follows KindlyMD’s merger with Nakamoto Holdings in August, diversifying the firm’s operations to combine traditional healthcare services with investments in digital assets.
The market responded positively to this news, with KindlyMD’s stock (NAKA) soaring 77.2% on Nasdaq, closing at $8.08. Despite this surge, the stock is down 43.4% over the past month; however, it remains up more than 550% year-to-date, largely fueled by investor excitement surrounding its crypto-focused strategy.
Despite these advancements, Metaplanet is facing challenges in its financing strategy. Analyst comments highlight concerns regarding the company’s reliance on “moving strike warrants” issued to Evo Fund to generate cash for Bitcoin acquisitions. This tactic, described as a “flywheel” by former Goldman Sachs derivatives trader Gerovich, previously enabled the company to secure low-cost funding while its stock price was on the rise.
However, following a dramatic increase of over 740% in share value within the past year, Metaplanet’s stock has dropped 54% since its peak in mid-June. This decline has affected the company’s ability to accumulate Bitcoin, leading to a slowdown in growth. Bitcoin holdings surged by 160% in the two months up to June but have increased by less than 50% since then.
Mark Chadwick, a former analyst with Jefferies, noted that as the stock price declines, each capital-raising exercise yields less funding for Bitcoin purchases, thereby slowing the “flywheel.” Analysts have also pointed out the compression of Metaplanet’s “Bitcoin premium,” which is the disparity between the company’s market capitalization and the value of its Bitcoin holdings. The premium, which was once more than eight times the BTC reserves in June, has narrowed to approximately two times, leading to growing concerns about the sustainability of the company’s strategy.
As Natixis analyst Eric Benoist articulated, the compression of this premium is critical to the success of Metaplanet’s strategy; if it continues to diminish, the company may struggle to accumulate Bitcoin on favorable terms, leading to waning interest from investors and a potential decline in stock value.
