VanEck analyst Matthew Sigel warns of growing risks for Bitcoin treasury companies as their stock prices approach NAV.
Matthew Sigel, Head of Digital Assets Research at VanEck, has sounded the alarm for companies that have adopted Bitcoin-based treasury strategies.
In a post on X, Sigel highlighted an emerging issue in the sector of companies holding Bitcoin treasuries. Until now, no public company with a Bitcoin treasury has ever traded below its own Net Asset Value (NAV) for extended periods. The NAV represents the net value of a company’s assets (such as bitcoin and cash) minus its liabilities, divided by the number of outstanding shares — essentially indicating the real value of each share based on the company’s holdings. However, at least one of these companies (Semler Scientific) is now dangerously approaching breakeven.
The core of the issue lies in the capital-raising mechanism. Many of these companies rely on large-scale at-the-market (ATM) programs to acquire bitcoin, but when the stock price nears the NAV, this strategy can shift from creating value to destroying it.
The risk for shareholders
Under normal market conditions, companies like Semler Scientific and Strategy trade at a premium to the value of the bitcoin they hold. This means investors are willing to pay more for the company’s stock than the simple value of its bitcoin treasury.
However, when a company’s stock price approaches or falls below its NAV, the situation becomes problematic, according to Sigel. Issuing new shares at these levels not only dilutes the value for existing shareholders but can also become extractive, as management continues to raise capital while benefiting more than shareholders.
Proposed solutions
Sigel suggested several measures for companies pursuing Bitcoin treasury strategies. His recommendations include implementing preventive safeguards while stock premiums still exist. Notably, he proposes announcing a pause in ATM issuances if the stock trades below 0.95 times NAV for ten or more consecutive trading days. Additionally, Sigel advises prioritizing buybacks when bitcoin appreciates but the company’s equity does not reflect that increase.
Lessons from Bitcoin miners’ past
The VanEck analyst pointed out that similar situations have occurred in the Bitcoin mining sector, marked by persistent equity issuances and disproportionate executive compensation. To avoid repeating those mistakes, Sigel suggests that executive pay should be tied to growth in NAV per share, not the size of the Bitcoin position or the total number of outstanding shares.
Sigel concluded:
“Once you are trading at NAV, shareholder dilution is no longer strategic. It is extractive. Boards and shareholders should act with discipline now, while they still have the benefit of optionality.”
