Shares in the healthcare-turned-Bitcoin holdings company KindlyMD Inc. halved on Monday as its CEO warned of an upcoming increase in “share price volatility” and encouraged short-term traders to sell if they’re only looking to profit.
“We expect share price volatility may increase for a period of time,” David Bailey said in a shareholder letter on Monday, citing the firm’s regulatory filing on Friday registering a $200 million discounted share sale to private investors.
“For those shareholders who have come looking for a trade, I encourage you to exit.”
KindlyMD’s deal, called a private investment in public equity (PIPE) offering, raised money by offering its shares at a discount, and its filing on Friday allowed those investors to freely trade their shares.
Analysts have aired concerns about the proliferation of so-called crypto treasury companies as the value of the crypto holdings of many firms is starting to outpace their market capitalizations.
KindlyMD stock drops 55% after shareholder letter
Investors seemingly took Bailey’s advice to exit, as shares in KindlyMD (NAKA) ended trading on Monday at a loss of 55.4% at $1.24.
The stock saw only a slight bump after the bell, gaining 4.8%.
It’s the lowest KindlyMD’s share price has been since early February, long before it announced plans to buy and hold Bitcoin (BTC) for the long term and merged with Bailey’s holding company, Nakamoto Holdings, last month.
Bailey says PIPE deal will flush non-aligned investors
Bailey said in his letter that while the PIPE deal shares entering the market will increase volatility, he sees it “as a critical opportunity for us to establish our base of aligned shareholders who are committed to our long-term vision.”
“This transition may represent a point of uncertainty for investors, and we look forward to emerging on the other side with alignment and conviction amongst our backers,” he added.
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Bailey noted on X that KindlyMD shares had seen “intense volume,” but marked it as a “day of transition” where the firm was “upgrading our shareholder base from short-term traders to long-term investors.”
“Almost 80m [million] shares have traded today,” he later added. “Once again I’m humbled by the support and look forward to meeting all our new shareholders!”
KindlyMD value falls below Bitcoin holdings
KindlyMD’s share price drop has seen its multiple of net asset value (mNAV) fall to 0.7 as the company’s market value has fallen below the value of its Bitcoin holdings.
The firm holds 5,765 BTC at a total value of over $665 million, while its market capitalization is $466 million, according to BitcoinTreasuries.NET data.
Bailey, however, was undeterred in his letter, stating KindlyMD’s mission is to create “the leading Bitcoin-native financial institution,” which he added required a “long-term strategy, creative thinking, and disciplined yet nimble execution.”
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