Key Takeaways:
- A significant influx of bitcoin treasury companies is focusing on acquiring Bitcoin, adopting strategies akin to that of MicroStrategy.
- While mNAV is frequently referenced as a valuation metric, Greg Cipolaro from NYDIG asserts that it is not sufficient on its own and recommends utilizing a blend of measures for a thorough evaluation.
A wave of new bitcoin treasury companies—firms that almost exclusively focus on accumulating Bitcoin—is entering the market.
As these businesses generally adhere to MicroStrategy’s strategy, discussions are emerging about the most appropriate methods for valuing and comparing them.
“The most critical metric for a bitcoin treasury is the premium at which it trades compared to its underlying net assets, inclusive of any associated operating company,” noted Greg Cipolaro, NYDIG’s global head of research, in a report dated June 6.
Translation: “The most critical metric for a bitcoin treasury is the premium at which it trades compared to its underlying net assets, inclusive of any associated operating company.”
On a basic level, this entails summing up the company’s Bitcoin, cash, and enterprise value minus Bitcoin-related items, as well as deducting financial obligations like debt and preferred stock. Cipolaro explained that “this premium allows these companies to convert shares into bitcoins, essentially functioning as money changers exchanging shares for bitcoins.”
Another widely used metric, mNAV, assesses a company’s worth against its net asset value—notably, their Bitcoin reserves. An mNAV higher than 1.0 indicates that investors are paying a premium for stock relative to its Bitcoin holdings; however, an mNAV lower than 1.0 suggests that the equity has depreciated compared to the company’s assets.
Despite its popularity, Cipolaro argued that mNAV alone is lacking in depth for assessing these companies’ strengths and weaknesses. The research report utilized alternative metrics such as NAV, mNAV adjusted for market capitalization, mNAV based on enterprise value, and equity premium to NAV, providing a more nuanced analysis.
The report found that Semler Scientific (SMLR) and Trump Media (DJT) exhibit the lowest equity premiums to NAV among eight tracked companies, at -10% and -16%, respectively, even though both have an mNAV exceeding 1.1.
Notably, both SMLR and DJT remained relatively stable on Monday, even as Bitcoin increased to $108,500 compared to Friday evening’s value of $105,000.
