Metaplanet’s Bitcoin Purchases Bring the Company Unexpected Benefits

The once little-known hotel business Metaplanet Inc. made a decision to accumulate Bitcoin (BTC), which eventually brought the company global attention.

According to analyst Shanake Anselm Perera, the company is currently carrying an unrealized loss of about $651 million from its investment in 30,823 BTC. At the same time, the organization is reporting record profits and preparing a complex preferred-shares transaction.

Perera outlined Metaplanet’s complicated financial picture. The company purchased Bitcoin at an average price of $108,036 per BTC, but with the cryptocurrency trading around $87,500 during the first half of November 26, the unrealized loss reached $651 million. This contributed to an 81% decline in the company's stock price since June.

However, the company’s financial statements paint a very different picture: revenue increased by 1700% year-over-year to 4.3 billion yen, while net profit for the fiscal year ending in September reached 13.5 billion yen.

According to Perera, Metaplanet’s strategy is based on reflexivity. When Bitcoin’s price rises and the company’s stock trades at a premium, it can issue shares to buy more BTC.

But when the shares began trading below the value of the Bitcoin owned by the company, the multiplier to net asset value (mNAV) fell to 0.88 at the end of November, making new share issuance destructive for current shareholders.

To continue raising capital, on November 20 the company launched a perpetual preferred instrument called MERCURY, with a 4.9% dividend and a conversion price of 1,000 yen. A shareholder vote on December 22 will determine whether approximately 21.25 billion yen of this capital will be activated.

Meanwhile, on the evening of November 26, Bitcoin’s price moved upward and broke above the $90,000 resistance level, lifting nearly the entire altcoin market with it.

See also: "Texas Becomes the First U.S. State to Officially Purchase Bitcoin"

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