The shares of Nakamoto, previously known as Kindly MD, have experienced a dramatic decline, plummeting by 95% over the past three months, from $35 to a concerning $1.30. This downturn has been exacerbated by a controversial letter sent to investors, which raised alarms about the company’s future.
In a communication dated September 15, David Bailey, the CEO and founder of Bitcoin Magazine, cautioned investors about potential volatility affecting NAKA. He advised shareholders who were searching for a bargain to consider exiting the business, acknowledging that the current situation represented a period of uncertainty for investors. “This transition may be a moment of uncertainty for investors,” Bailey emphasized.
The “transition” referenced by Bailey relates to the filing of an S3 registration form with the U.S. Securities and Exchange Commission (SEC) on September 12. This filing followed the company’s earlier practice of selling shares at a discount, which prohibited certain investors from selling their shares until the S3 form was submitted. Analysts believe this regulatory filing has likely influenced the stock’s downturn, although the price had been in a steady decline since May when it peaked.
On the same day, Bailey reported the trading of nearly 80 million shares, expressing gratitude for the support from investors on social media platform X. He mentioned his efforts to meet with PIPE investors throughout the week, indicating a focus on retaining long-term shareholders despite the current crisis.
Addressing the troubling situation, Bailey stated that the only way to navigate these challenges is to “go through it.” Nakamoto was formed through the merger of medical provider Kindly MD and a Bitcoin holding company, Nakamoto. At its inception, the company raised approximately $710 million to establish a Bitcoin reserve, achieving a peak valuation over 20 times that of its initial cryptocurrency holdings. However, the market value of the net asset value (mNAV) has dramatically fallen to 0.82.
According to Nasdaq regulations, if a company’s stock price remains below $1 for 30 consecutive days, it will receive a warning and be granted 180 days to rectify the issue, or face delisting from the exchange. Additionally, earlier reports from JPMorgan indicated that the exclusion of Strategy from the S&P 500 was a significant setback for crypto treasuries, further complicating the financial landscape for companies like Nakamoto.
