- VanEck’s Matthew Sigel warned that public firms like Semler Scientific risk shareholder dilution if their stock price falls near or below the value of their Bitcoin per share (NAV).
- As long as shares trade above NAV, issuing equity to buy BTC adds value; but if prices drop to parity or lower, new issuances erode existing shareholder value.
- Semler’s stock has dropped 25 % in 30 days and now hovers near parity despite BTC hitting US$110K.
VanEck’s head of digital asset research, Matthew Sigel, has warned public companies that the strategy of accumulating Bitcoin could backfire if equity prices plunge too far below the value of their crypto holdings.
Sigel flagged the issue on Monday on a post on X, putting Semler Scientific as an example. This firm, as Crypto News Australia reported, went all out on Bitcoin, raising dozens of millions of dollars to acquire Bitcoin at a fast rate.
Despite rapidly climbing the Bitcoin treasury leaderboard, Semler now risks being the first to slip below parity, according to Sigel’s analysis. This is due to the stock price dropping close to or beneath the company’s NAV:
If the stock trades at or near NAV, continued equity issuance can dilute rather than create value. That is not capital formation. It is erosion.
Matthew Sigel, VanEck’s head of digital asset researchSo, what does that mean? NAV, at least in this context, is the effective dollar value of a company’s Bitcoin holdings per share —a figure investors watch closely to determine how much actual BTC backs each unit of stock. Therefore, as long as the market trades well above that level, companies can issue new shares to buy more Bitcoin and drive value.
Related: Trident Digital Tech Eyes $500M XRP Treasury as Shares Plunge Over 30%
All good, but once the stock price slips to parity or below, the math flips and dilution starts to outweigh any treasury upside.
A Clear Warning
Sigel’s claim is not anti-Bitcoin, more of a straightforward warning: if a stock price drops close to or beneath its NAV, raising capital through at-the-market offerings to buy more BTC becomes a net negative, which means the market no longer sees an upside in the strategy and every new share issued just waters down the existing claim on crypto assets, as mentioned.
The price of SMLR is down 25% in the last 30 days, currently trading at US$30 (AU$46), while Bitcoin has reached new heights of over US$110K (AU$168K).
Source: Google Finance.
Sigel states that this situation rarely happens, which is why he begins by saying that no major Bitcoin-holding public company has slipped below parity for a sustained stretch, but “at least one is now approaching parity”.
Related: Japanese Firms Double Down on Bitcoin: ANAP and Remixpoint Boost Holdings Beyond ¥17 Billion
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