VanEck’s Matthew Sigel Warns Bitcoin-Backed Companies of Stock Price Drops
Matthew Sigel, head of digital asset research at the American asset management firm VanEck, believes that publicly traded companies purchasing Bitcoin should consider completely terminating this strategy if they experience significant stock price declines. He warned that there is currently one company utilizing a Bitcoin reserve strategy that is on the brink of trouble.
On the 16th, Sigel stated on the social media platform X:
He added that no publicly traded company has yet traded below its net asset value of Bitcoin for an extended period, but the medical technology company Semler Scientific (stock code SMLR) “is close to this level.”
Like other companies holding Bitcoin, Semler has raised funds through multiple rounds of stock and debt issuance to purchase more Bitcoin, with the company and investors jointly betting that the cryptocurrency will boost Semler’s stock price. Since May 2024, Semler has accumulated 3,808 Bitcoins, worth approximately $404.6 million, making it the 13th largest publicly traded company by Bitcoin holdings worldwide.
Despite Bitcoin reaching new highs this year, as of last Friday, Semler’s stock price has fallen over 45% this year, returning to the price level when the company first purchased Bitcoin, resulting in a market capitalization shrinkage to approximately $434.7 million. According to data from Coinkite, Semler’s NAV multiple (mNAV), which is the market capitalization divided by its Bitcoin value, has dropped below 1, at about 0.821.
Sigel believes that companies adopting a Bitcoin reserve strategy should establish risk mitigation mechanisms immediately while the market still has a premium. His recommendations include: if the stock price remains below 0.95 times NAV for at least 10 consecutive trading days, the company should announce a suspension of its ATM issuance plan; when Bitcoin rises but the stock price fails to reflect its value, stock buybacks should be prioritized; and if the NAV discount situation persists, a strategic review should be initiated, potentially including mergers, spin-offs, or termination of the Bitcoin strategy.
Sigel also stated that these companies should link executive compensation to “growth in net asset value per share” rather than to Bitcoin holdings or total shares issued, and reiterated his call to company leaders: “They should take disciplined action while they still have the option to do so.”