Out of twenty companies, only four still have their stock prices higher than the crypto they hold in their own hands.
An industry report gave this figure, and then pointed out its consequences: it undermines the kind of financing-and-buying model these companies rely on to keep acquiring crypto assets. It sounds like a valuation problem, but it isn’t.📊
For the past two years, the way this type of company operates has been quite fixed: as long as the stock price is higher than the net value of the assets they hold, issuing new shares is profitable—sell equity for cash, turn the cash into coins immediately, the net value gets boosted, and then the stock price rises again, completing the cycle. There’s no need for a new business model in the middle—only the maintenance of the premium.
Once the premium disappears, the same set of actions starts to work in reverse. Issuing shares becomes like giving up equity at a cheaper price; the coins being bought haven’t even warmed in the wallet before taking a loss. Meanwhile, operating expenses, dividends, and early shareholders’ exit needs are still waiting for cash. With the cost-effectiveness of financing gone, they can’t keep making these moves.
So the “four out of twenty” figure isn’t a valuation handed down by the market—it means sixteen companies are in the process of losing their primary financing tool. The remaining options are there: sell down, borrow money, or wait for the market to push them back into the premium range.
The indicator has flipped—so the moves must flip with it.
An industry report gave this figure, and then pointed out its consequences: it undermines the kind of financing-and-buying model these companies rely on to keep acquiring crypto assets. It sounds like a valuation problem, but it isn’t.📊
For the past two years, the way this type of company operates has been quite fixed: as long as the stock price is higher than the net value of the assets they hold, issuing new shares is profitable—sell equity for cash, turn the cash into coins immediately, the net value gets boosted, and then the stock price rises again, completing the cycle. There’s no need for a new business model in the middle—only the maintenance of the premium.
Once the premium disappears, the same set of actions starts to work in reverse. Issuing shares becomes like giving up equity at a cheaper price; the coins being bought haven’t even warmed in the wallet before taking a loss. Meanwhile, operating expenses, dividends, and early shareholders’ exit needs are still waiting for cash. With the cost-effectiveness of financing gone, they can’t keep making these moves.
So the “four out of twenty” figure isn’t a valuation handed down by the market—it means sixteen companies are in the process of losing their primary financing tool. The remaining options are there: sell down, borrow money, or wait for the market to push them back into the premium range.
The indicator has flipped—so the moves must flip with it.