SAN FRANCISCO – Semler Scientific’s recent valuation raises concerns for Bitcoin treasury firms.
Nasdaq-listed healthcare technology company Semler Scientific was valued at a slight premium to its Bitcoin holdings on Tuesday, as reported on the company’s website. The firm’s multiple-to-net asset value (mNAV) hovered at 1.07, indicating that its enterprise value of $498.5 million was just above the worth of its 4,449 Bitcoin, valued at $466 million.
Immediate Impact
Semler’s mNAV status is significant because if it falls below one, the firm faces difficulties in increasing Bitcoin per share. This metric is crucial for Bitcoin treasury companies, which aim to maximize shareholder value by growing their Bitcoin holdings per share.
“Semler is now in a position where many Bitcoin treasury companies may find themselves in the coming quarters: trading close to NAV and facing pressure to demonstrate capital discipline,” said Matthew Sigel, head of digital assets research at VanEck.
Key Details Emerge
In its latest move, Semler acquired 185 Bitcoin for $20 million, as disclosed in a regulatory filing. The company also indicated the possibility of selling $364 million worth of common stock through an at-the-market (ATM) offering program.
According to Ben Werkman, chief investment officer at Swan Bitcoin, a discount in mNAV can alarm investors if they suspect the firm is unable to raise funds effectively to benefit shareholders.
Industry Response
Matthew Sigel suggested that Bitcoin treasury firms could stabilize their value by pausing ATM issuance if the stock falls below 0.95 times NAV for more than ten trading days, and by prioritizing share buybacks when Bitcoin appreciates.
“The company has several strategic levers it can pull to stabilize value. If management prioritizes shareholders, I believe the risk/reward at current levels is favorable,” Sigel noted.
Background Context
Semler is not new to Bitcoin investments, having made its first purchase in May. The firm recently faced a tentative $30 million settlement with the U.S. Department of Justice over allegations related to its QuantaFlo product marketing. Additionally, Rosen Law Firm announced an investigation into potential securities claims on behalf of shareholders.
Semler’s stock price dropped 6.5% on Tuesday, closing at $28.30, according to Yahoo Finance. The company holds the 10th largest Bitcoin treasury by dollar value, just behind GameStop.
What Comes Next
Some analysts have warned that a drop in Bitcoin’s price could force companies to sell their holdings, reversing this year’s buying pressure. Semler’s mNAV, affected by legacy business issues, small market cap, and limited liquidity, remains under scrutiny.
As the industry watches closely, the future of Bitcoin treasury firms like Semler may hinge on their ability to adapt and maintain investor confidence amidst fluctuating market conditions.
