After losing 10 billion US dollars in three months, why did DAT's stock price not fall but rise?
By Eric, Foresight News
Original title: After losing 10 billion US dollars in 3 months, DAT began to return to rationality
The earnings season has just come to an end, and the Crypto Treasury Company (DAT) handed over a seemingly disastrous questionnaire. Strategy's net loss for the second quarter was US$8.22 billion, of which 8.32 billion was a reduction of the fair value of Bitcoin holdings; Strive had a net loss of US$258 million, with over 90% falling prices of Bitcoin and STRC preferred shares held by it; Sharplink's net loss of US$394 million; Metaplanet's net loss of 182.8 billion yen (about US$1.15 billion) in the first half of the year, of which about US$430 million in the second quarter; Bitmine, due to the fiscal year ending in August, It lost only $83.6 million in the March-May fiscal quarter, but the cumulative net loss over the past nine months has exceeded $9 billion. The five companies combined had a net loss of about 10 billion US dollars in the second quarter, and accumulated more than 30 billion US dollars in the first half of the year.
A year ago, such a statement was enough to trigger a panic sell-off. But what actually happened was a different story. Strategy's stock price closed up 4.73% on the day the earnings report was released, while the options market originally fluctuated 8% in both directions. From the low at the end of June, Bitmine rebounded about 36%, Sharplink rebounded about 37%, Strategy and Strive rose more than 10%, and Metaplanet also rebounded about 15% from its late-June low.
The loss is real, but the market has already measured it
Everyone knows that DAT's second-quarter earnings report must have been a huge loss, the difference between 10 billion and 9.9 billion.
Large DAT companies have their own dashboards, or at least there are people who continuously count relevant data. Every financing, every time Bitcoin or Ethereum is being watched by the world with a magnifying glass. Therefore, everyone in the market can see how much money was lost in the second quarter. The financial report simply confirmed what had already happened.
What has caused the stock prices of these DAT companies to “bottom up” is that both the market and the company have returned to rationality.
In the second quarter, Strategy raised $8.4 billion in a single quarter, surpassing any quarter of last year; in May, it repurchased $1.5 billion of convertible bonds at a face value of 9.2 billion, reducing total convertible bonds from 8.2 billion to 6.7 billion dollars; and in June, Sharplink completed a targeted increase of $75 million at a price higher than net asset value, while using an average price of $4.70 to buy back its shares.
In the performance guidance and earnings call, most of these companies invariably gave the same direction: focus on increasing the “content” of each share of crypto assets.
Last year, DAT told a story of growth. Whoever buys coins faster will rise. The tide receded this year, and the surviving companies all exchanged KPIs for the same indicator, the number of crypto assets corresponding to each share. Strategy's Bitcoin content per share increased 5% month-on-month in the second quarter; Metaplanet's fully diluted Bitcoin holdings increased 9.6% in the first half of the year; Sharplink repeatedly emphasized the increase in ETH content per share.
Accompanying this goal is discipline. Metaplanet clearly implements a set of capital allocation policies. When MNaV is above 1x, it issues additional shares to buy coins, stops issuing additional shares when it is less than 1x, and instead uses preferred shares and credit instruments, and even repurchases stocks. In the second quarter, just because its MNaV fell below 1 times, the company voluntarily abandoned targeted increases from third parties, preferring to slow down the growth rate of its holdings rather than dilute shareholders at a discount. Sharplink and Strategy have also launched repurchases. Treasury companies are no longer brainlessly expanding, but are returning to a simple question: how to make each share more money behind it.
Strategy even went against its promise to “never sell coins” for this goal, and its stock price also had the lowest rebound among mainstream DAT companies. This is a pain that must be experienced from “above” to rationality.
STRC model apprentices
A new tool to achieve this goal is STRC, invented by Strategy in July last year, a perpetual preferred stock with a face value of $100 anchored and dividends adjusted monthly. The logic is simple: use an annualized dividend of around 12% to attract capital seeking fixed income, and then exchange the money for Bitcoin. By the end of the second quarter of this year, STRC's nominal size had grown from $2.8 billion at the beginning of the year to $10.5 billion, and the institutional capital holding it had increased from 1.1 billion to 3.1 billion, accounting for 29%.
The imitators have lined up. Strive's SATA mentioned a dividend rate of 13% and became the first security in US stock history to pay dividends every working day on June 16. By the beginning of August, it had paid 44 consecutive dividends. The price remained close to face value, and the company also took the opportunity to pay off all of its debts. Bitmine issued BMNP, a perpetual preferred stock with a 9.5% dividend in June, raising $274 million. Metaplanet's MERCURY preferred shares have been issued for 21.2 billion yen. Although new products such as MARS were delayed due to dividend payment habits in the Japanese market, it instead launched a “BitBonds” social bond program with an annual interest rate of 4% or more in August to explore the local version of digital credit.
Sharplink is the only one left out of the five. It chose a different path, staking almost all of its nearly 890,000 Ether and using native income and on-chain funds to make the snowball roll, including a $125 million on-chain income fund with committed capital in partnership with Galaxy. But that doesn't essentially defeat the goal of increasing cryptocurrency holdings per share.
The premium will disappear, and fundraising will remain
Of course, the other side of a return to rationality is the decline in premiums. Strategy's corporate value mNaV once fell below 1 times in June. Sharplink's market capitalization is currently below the value of its Ethereum holdings, and Metaplanet has been forced to shrink financing due to discounts. DAT stocks are moving downward from the premium center of their crypto holdings, which is probably an irreversible trend.
Even if the bull market returns tomorrow, the hurt market probably won't lose its mind again.
But that doesn't mean the end of the model; it shows up. After stripping away the narrative, DAT is essentially a type of themed fund with active management and financing instruments, which earns a long-term compound increase in content per share. Such a product has its own buyers. According to the 13F document, 13 of MSTR's top 15 institutional shareholders increased their holdings in the first quarter of this year, adding a total of 4.6 billion US dollars, of which Capital International added 1.92 billion; Jane Street increased MSTR holdings by 473% in the fourth quarter of last year. Behind Bitmine are Founders Fund and ARK, and Sharplink's institutional shareholding ratio rose from 6% to 46% within a year.
A quarter's loss of 10 billion dollars did not kill DAT; instead, it turned it back into business from fanaticism. When currency prices fall no longer frighten shareholders, and when the company starts making careful calculations for the little bit of money behind each share, the industry can truly be considered an adult.
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