May 28, 2024

Metaplanet’s shares soared by 90% after purchasing bitcoins for reserves.

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Stock quotes of the Japanese public company Metaplanet rose by almost 90% after announcing the acquisition of bitcoins worth 1 billion yen (~$6.6 million) on its balance sheet as part of a new strategy.

The company called this the first step towards transitioning its treasury to the first cryptocurrency.

According to the statement, the deal was facilitated by Sora Ventures, Mark Yusko of Morgan Creek Capital, and other industry representatives.

“Transitioning to bitcoin is a major milestone in our mission to lead in the era of digital finance and positions Metaplanet as a pioneer in the adoption of cryptocurrencies in Japan,” the statement said.

In a letter to investors, the company explained the decision to convert capital into cryptocurrency due to the continuous weakening of the yen as a result of negative interest rate policies. Despite its volatility, Bitcoin has consistently grown over the years. The firm expects that digital gold will continue to outperform the Japanese currency.

“The company’s decision to include bitcoin in its treasury assets is based on a multifaceted understanding of its potential as a hedge against inflation, a tool for macroeconomic stability, and a foundation for long-term capital growth,” emphasized Metaplanet.

It is expected that the company’s investors will be able to indirectly own bitcoins, reducing their “exposure of their portfolio to the yen” and diversifying it.

The closing price of Metaplanet shares reached 36 yen compared to 19 yen at the start of the trading session, a growth of 89.47%.

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Data: MarketWatch.

According to the company’s website, it operates globally in the areas of Web3 consulting, real estate, and investments. The company started its business under the name Red Planet as an operator of a network of budget hotels.

Users noticed that Metaplanet’s market capitalization is ~$12 million, it was unprofitable at the end of 2023. According to some, it is incorrect to compare the company to MicroStrategy.

Michael Saylor’s company was the first publicly traded company to start converting reserves to Bitcoin in August 2020. After purchasing 9245 BTC for $623 million in March 2024, the cryptocurrency holdings in its possession reached 214,246 BTC – more than 1% of the issuance.

According to BitcoinTreasuries, MicroStrategy’s market capitalization is $25.7 billion, and the share of Bitcoin reserves in the indicator is ~59%.

Regarding Metaplanet’s new strategy, a commentator under the pseudonym Pledditor warned:

“This looks like a major grift. It’s a shitcoin VC company, so just be warned unlike MSTR, you are exposed to the entirety of their fund which includes shitcoins.”

Recall that at the end of March, MicroStrategy’s stock quotes reached a 24-year high amid the recovery of the Bitcoin price.

Analysts at Kerrisdale Capital called the company’s securities overvalued.

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