- Metaplanet has been mirroring Strategy’s Bitcoin buying plan.
- The stock is up 233% this month, implying a $596,154 Bitcoin price, says one analyst.
- The company is the most shorted stock in Japan.
Short sellers are piling into bets against Metaplanet.
The Tokyo-listed firm is the Japanese version of Michael Saylor’s Strategy — a company that raises capital by issuing debt to buy more Bitcoin.
Analysts at 10xResearch estimate that Metaplanet’s stock price implies a Bitcoin price of about $596,154.
That’s more than five times Bitcoin’s price of about $109,000.
That disconnect has triggered alarm bells.
“Time to short?” wrote 10xResearch in a report released on May 27. “The signals we see now closely resemble past inflection points.”
Metaplanet’s holds some 7,800 Bitcoin worth about $850 million.
But its market capitalisation has ballooned far beyond the actual value of its Bitcoin holdings — which means investors are paying a hefty premium for indirect exposure to Bitcoin.
10xResearch calls it “a dangerous NAV distortion forming beneath the surface.”
NAV stands for net-asset value. It’s basically what a company’s assets are worth when added up. When there’s a NAV distortion, it means a company’s stock price gets out of line with the actual value of what it owns.
Metaplanet is up 233% this month.
“We’ve drifted far from Satoshi’s original vision of a truly peer-to-peer electronic cash system,” 10x Research wrote. “Today, billions in retail capital are funneled into vehicles that promise Bitcoin exposure, but often at a steep markup.”
Shorts pounce
In April, Metaplanet topped the list for Japan’s most shorted stocks, according to data from S&P Global Market Intelligence.
As more firms follow Michael Saylor’s playbook, which involves issuing debt to buy Bitcoin, short sellers are circling.
Short sellers profit by borrowing shares in a company then selling the stock in a bet that the price will drop. When the price falls, they buy the shares then return them to the lender, pocketing the difference.
Doubters have been mounting.
Short seller Jim Chanos said he is betting against Strategy, and buying Bitcoin as a hedge.
“Strategy, and more ominously its copycats, are selling retail investors the idea that they are buying Bitcoin at a corporate structure so they should value them at a premium,” Chanos said in a May 14 interview with CNBC.
“It’s ridiculous.”
Crypto market movers
- Bitcoin fell 0.8% over the past 24 hours to trade at $108,772.
- Ethereum is flat over the same period with a price of about $2,632.
What we’re reading
- Trump Media mimics Michael Saylor with $2.5bn Bitcoin buying plan ― DL News
- Interpol target ‘Madam Ngo’ arrested over $300M crypto scam— Protos
- Satoshi Nakamoto just got richer than Nvidia’s CEO and the Walmart heirs ― DL News
Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.