Metaplanet's M/NAV Hangover And Why The Stack Keeps Climbing

Summary Metaplanet's BTC holdings per share grew 32.3% in two months, reinforcing the core investment case despite a 45% stock ￰0￱ premium over NAV compressed, but capital raises remain accretive; new international share offering and preferred shelf aim to diversify funding. Q2 marked strong BTC income generation, and FTSE Japan Index inclusion should attract passive inflows, broadening the shareholder ￰1￱ risks remain, I see m/NAV compression as a buying opportunity, with Metaplanet positioned as Tokyo’s flagship listed bitcoin ￰2￱ in early July, we walked through Metaplanet’s ( MTPLF ) monumental shift from quirky hotels to Asia’s flagship Bitcoin Treasury ￰3￱ talked about the “moving-strike” warrants strategy, zero-coupon bonds, the “555 Million Plan,” and how raising equity at a premium to net asset value NAV could keep BTC per share ￰4￱ was the very ￰5￱ somewhat similar flywheel previously embraced by Strategy ( MSTR ) that Metaplanet now "localised" to ￰6￱ then, however, the story has added some grit, as even though the company’s bitcoin pile is meaningfully larger today, the stock is down 45% since my article went out.

A pretty disheartening result for a two-month ￰7￱ Performance Since 1st Article (Seeking Alpha) What actually drove the share price slide? The clearest explanation is persistent m/NAV compression, or a compression in the market multiple paid over Metaplanet’s per-share BTC NAV, which has shrunk ￰8￱ you can see from the company's official analytics in the chart, in June and early July, when I published my initial piece, investors were paying several times the NAV to front-run future BTC/share ￰9￱ late summer, the premium cooled even as the firm continued to buy bitcoin, hence the multiple compression BTC is trading at the same levels as two months ￰10￱ (Official Company Analytics) Meanwhile, the BTC stack didn’t stop But did Metaplanet really achieve anything meaningful during this period?

Yes, because they didn't stop ￰11￱ if a softer multiple made it increasingly less attractive to issue equity to buy BTC, it still made sense to do so, as it is accretive on a BTC/share ￰12￱ my July article, when the balance stood at 13,350 BTC, Metaplanet’s buys have been relentless, with today's (Sep.1) disclosure pushing its total holdings to 20,000 ￰13￱ Holdings (Official Company Analytics) But more importantly, these BTC buys were quite accretive on a per-share basis, which is the whole foundation of Metaplanet's investment case against, say, buying a BTC ￰14￱ you can see, Metaplanet now owns ₿0.02111503 per 1,000 shares, up from ₿0.01595568 on July 1st.

That's a 32.3% increase in BTC/share in just two months, which also goes to show why it makes sense that the stock trades at a premium, and is likely to continue to do ￰15￱ (Official Company Analytics) Q2 was also the first quarter where the “Bitcoin Income Generation” line really showed up in the P&L, as management reported ¥1,239 million ($8.4 million) in revenue and ¥817 million ($5.56 million) in operating profit, with ¥1,131 million ($7.7 million) of that revenue coming from cash-secured BTC ￰16￱ strategy didn’t change; its funding mix did Now, even though Metaplanet did achieve excellent per-share accretion on its BTC holdings, you can clearly see in the chart that this pace is still nowhere near the pace between the start of the year and ￰17￱ course, the softer multiple explains ￰18￱ is still accretive to BTC/share to raise capital close to 2x NAV to buy BTC, but not as much as it is at 6x ￰19￱ response to this "problem," just a few days ago, on August 27, Metaplanet’s board approved an international share offering targeting ¥130.3 billion (~$880 million).

The company’s notice hints, as we would expect, that most proceeds are earmarked for buying more ￰20￱ the same batch of disclosures, the company temporarily suspended exercises of several moving-strike warrant series, which again is a nod to today’s tighter premium and them seeking more accretive BTC stacking ￰21￱ overseas offering is a big deal because it will broaden the investor base beyond the EVO-driven warrant ecosystem that worked brilliantly when local demand (and m/NAV) was roaring. A marketed international deal should let Metaplanet tap deeper pools of long-only and crossover capital, set a clearing price through bookbuilding, and reduce reliance on the day-to-day warrant exercises to fund BTC purchases, which could re-accelerate treasury ￰22￱ company also pushed forward a two-year shelf to issue up to ¥555 billion of perpetual preferred ￰23￱ its Q2 presentation, management positions the prefs as BTC-backed credit designed for Japan’s enormous (and, as I explained in my initial article, underutilized) fixed-income ￰24￱ approved and launched, that should be a structural way to scale holdings even when the common stock premium ￰25￱ has adopted the same philosophy by building a yield curve across STRF ( STRF ), STRD ( STRD ), STRK ( STRK ), and STRC ( STRC ), so this could be a similar issuance journey for ￰26￱ fact, given that Japan is starved of fixed income and income-generating preferred shares, Metaplanet's instruments could prove wildly successful among regional investors.

A quiet but material tailwind: Index inclusion One more piece that didn’t grab as many headlines is that, last week, FTSE Russell upgraded Metaplanet to mid-cap and added it to the FTSE Japan Index in the September ￰27￱ will pull in passive flows that otherwise probably wouldn't have touched a niche Bitcoin treasury name, especially relevant in a market where local, plain-vanilla spot BTC vehicles are ￰28￱ factor, too, should broaden the shareholder base and, potentially, support a higher NAV premium as passive inflows add to the stock's buying volumes. So… was the drawdown a thesis break or a reset? If your thesis was “Metaplanet can keep raising at a 6-10x premium forever,” then sure, the past couple of months have been tough.

But, if your thesis was “Metaplanet will keep growing its BTC stack and build multiple ways to fund that stack,” the facts line ￰29￱ company continues to aggressively stack BTC, increasing the per-share BTC value, even in a challenging market for its ￰30￱ it's true that none of this removes the risks. A stubbornly light premium could make the flywheel less accretive for a while, bitcoin’s volatility can swamp any quarter, and the preferred program could go south, for whatever reason, eroding hopes for faster BTC/share ￰31￱ if you buy the core idea that Metaplanet is the primary listed proxy for bitcoin exposure in Tokyo and is deliberately plugging into Japan’s enormous savings and fixed-income base, I feel that the m/NAV compression reads like an ￰32￱ entry multiples today, more diversified funding tomorrow, and a treasury that (so far) keeps getting bigger support the bullish story.