Metaplanet readies further Bitcoin purchases

Metaplanet (TSE:3350) is aggressively pursuing a "Bitcoin First, Bitcoin Only" strategy, transforming its operations and balance sheet around Bitcoin acquisition and related activities. Here is a summary of their recent activities based on the announcements this week.

1. Bitcoin Treasury Operations as a New Business Line

Metaplanet has formally established Bitcoin Treasury Operations as a core business line. This move goes beyond simply holding Bitcoin as a treasury asset and integrates Bitcoin acquisition and management into the company's overall strategy. Key aspects of this new business line include:

• Aggressive Bitcoin Accumulation: Metaplanet is committed to maximizing its "BTC Yield," which measures the growth of Bitcoin held per share, exceeding any dilution from equity issuance. They will utilize various financing methods, including loans, equity offerings, and convertible bonds, to aggressively acquire more Bitcoin.
• Put Option Sales: The company is leveraging Bitcoin's price volatility by selling put options, generating premium income while increasing its Bitcoin holdings.
• Bitcoin Magazine Japan: Metaplanet has secured the exclusive operating rights for Bitcoin Magazine Japan. This initiative aims to establish revenue streams from Bitcoin-related marketing and position Metaplanet as a leader in Bitcoin adoption and education within Japan.

2. Issuance of Stock Acquisition Rights and Bonds

To fund its Bitcoin acquisition strategy, Metaplanet has undertaken several financing activities:

• 12th Series Stock Acquisition Rights: Metaplanet completed a third-party allotment of stock acquisition rights to EVO Fund, raising ¥17.8 million. These rights grant EVO Fund the option to purchase up to 2.9 million common shares, with an initial exercise price of ¥3,288, subject to daily adjustments based on market price. This mechanism provides Metaplanet with potential future capital inflows linked to its share price performance.
• 4th Series Ordinary Bonds and Future Bond Issuance: Metaplanet issued ¥4.5 billion in 4th Series Ordinary Bonds to EVO Fund, with a maturity date of June 16, 2025. Furthermore, they announced plans to issue up to an additional ¥5 billion in ordinary bonds (private placement) to EVO Fund in one or multiple tranches. The proceeds from these bond issuances will be used to purchase Bitcoin. The bondholder has the option for early redemption under specific conditions related to the exercise of stock acquisition rights and the cumulative amount paid to the company.

3. Consolidated Earnings Forecast

Metaplanet’s consolidated earnings forecast for the fiscal year ending December 31, 2024, reflects their evolving business model:

• Revenue Growth: Projected revenue is ¥890 million, a significant increase from the previous fiscal year's ¥261 million. This is driven by strong performance in their hotel business and income from Bitcoin put option sales.
• Operating Profitability: Metaplanet projects an operating profit of ¥270 million, a substantial improvement from the ¥468 million loss in the previous fiscal year. This positive turnaround is attributed to the combination of strong hotel performance and Bitcoin-related income.
• Bitcoin Holdings: The company holds 1,142.287 Bitcoin, representing a significant unrealized gain. However, due to Bitcoin's price volatility, forecasts for ordinary profit and net income were not provided.

4. Overall Strategy and Outlook

Metaplanet's strategy is a bold bet on Bitcoin's continued appreciation. They are leveraging debt and equity financing to aggressively acquire Bitcoin, utilizing put option sales to generate income, and establishing a media presence through Bitcoin Magazine Japan. This multi-pronged approach aims to position them as a leader in the Bitcoin ecosystem within Japan. The success of this strategy is inherently tied to Bitcoin's future price performance and the company's ability to manage its financial leverage. The company acknowledges the inherent risk associated with Bitcoin volatility and is transparent about its impact on their financial reporting. While the near-term outlook appears positive, the long-term success of this strategy remains to be seen.

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