In recent years, the Japanese yen has experienced sharp declines in its exchange rate. Metaplanet, a listed company, has since April announced multiple significant purchases of Bitcoin, actions often seen as mirroring those of the American company MicroStrategy.
Embracing Bitcoin Investment
As of May 23, Metaplanet holds a total of 141.07 Bitcoin, valued at approximately $9.6 million. CEO Simon Gelovich candidly expressed in a recent interview that while becoming Japan’s version of MicroStrategy is a lofty goal, the aim is to offer Japanese investors opportunities to engage in Bitcoin investments through similar strategic initiatives.
Following its shift towards Bitcoin investment, Metaplanet rapidly influenced market sentiment. Fueled by multiple rounds of positive news, the company’s stock price surged dramatically by 360% within two months after a prolonged period of stagnation. This trend mirrors the upward trajectory seen in MicroStrategy’s stock price following its Bitcoin investments, drawing significant attention from users.
Formerly known as Red Planet Hotels, Metaplanet was a popular budget hotel brand among young people with operations in Thailand, Japan, the Philippines, and Indonesia. However, the COVID-19 pandemic led to a sharp decline in operational revenue and staff layoffs.
Subsequently, the company diversified into Web3 and metaverse businesses, including projects like WEN Tokyo, Takumi-X, and an NFT trading platform. With the continued depreciation of the yen against the dollar, Metaplanet has further adjusted its corporate strategy.
Metaplanet’s official website indicates ongoing business transformation. It states: “Metaplanet Corporation (Stock Code: 3350), listed on the Tokyo Stock Exchange, has begun implementing a strategic shift. The company’s focus has shifted towards Bitcoin, with Bitcoin (BTC) becoming its primary treasury reserve asset. Excess cash flows are being directed towards further accumulation of Bitcoin. This strategic pivot is driven by Bitcoin’s unique properties, such as its absolute scarcity and apolitical monetary policy.”
Under its business section, Metaplanet has introduced “Bitcoin consulting” services: “Metaplanet Corporation offers specialized consulting services to assist enterprises in adopting Bitcoin. The company provides strategic guidance aimed at maximizing potential within existing corporate frameworks while overseeing entire corporate restructurings. From strategy formulation to facilitating integration, Metaplanet helps enterprises establish Bitcoin as a cornerstone of future development. Additionally, Metaplanet actively cultivates strategic partnerships to promote global Bitcoin adoption. Through collaboration with industry leaders, Metaplanet advances Bitcoin’s ongoing monetization as a primary reserve asset.”
Japanese Version of MicroStrategy
On June 25, Metaplanet announced on the X platform that it had established a wholly-owned subsidiary in the British Virgin Islands to strengthen strategic management of its BTC assets.
Initially focused on research, MicroStrategy, as the current largest Bitcoin bull, transformed successfully after announcing its Bitcoin purchase in August 2020. Despite mixed reviews during its process of leveraging and accumulating Bitcoin through debt financing, its stock price has since increased tenfold. As of June 20, MicroStrategy holds 226,331 Bitcoin, valued at nearly $15 billion.
In a media interview, CEO Simon Gelovich stated, “While becoming Japan’s version of MicroStrategy is a challenging goal, we aim to provide Japanese investors with opportunities to engage in Bitcoin investments through similar strategies. Regardless of short-term price fluctuations, we plan to continue purchasing Bitcoin… We hope that Bitcoin will occupy a significant portion of our balance sheet in the future.” He emphasized the company’s commitment to “actively promoting Bitcoin’s positive role domestically and internationally.”
When asked about considering investments in digital assets other than Bitcoin, Gelovich responded, “We focus solely on Bitcoin because we believe it is the only truly decentralized digital asset. Although Bitcoin’s Proof of Work consensus mechanism is often viewed as a weakness by supporters of other cryptocurrencies or securities, it is in fact one of Bitcoin’s greatest strengths. Its direct linkage to the physical world through energy input makes Bitcoin a rare digital asset.”
Gelovich highlighted that MicroStrategy’s stock trades at a 1.75 times premium based on its Bitcoin holdings. “We believe that by maximizing our per-share Bitcoin holdings, Metaplanet can enjoy a similar premium. Furthermore, we plan to explore additional revenue opportunities within the Bitcoin ecosystem.”
Regarding hedging Bitcoin price fluctuations, Gelovich mentioned considering various methods but primarily plans for long-term investment and holding of Bitcoin. “We maintain an unwavering stance on price fluctuations. We do not view volatility merely as a traditional ‘risk’ but rather as an opportunity.”
Frequent Bitcoin Purchases, Stock Price Surges in Two Months
Since April, Metaplanet’s activities in purchasing Bitcoin have been frequent. On April 9, Metaplanet announced partnerships with Sora Ventures and Morgan Creek Capital’s Mark Yusko, adding $6.56 million worth of Bitcoin to its balance sheet. Two weeks later, the company additionally acquired 19.87 Bitcoin.
On May 13, Metaplanet further announced using Bitcoin as a strategic reserve asset to hedge Japan’s growing debt burden and yen volatility. On May 23, the company’s stock price surged by 158% in the preceding week. Due to this significant rise, the Tokyo Stock Exchange halted its stock trading for two consecutive days. On June 11, Metaplanet announced another increase, purchasing 23.35 Bitcoin, bringing its total holdings to 141.07 Bitcoin, valued at approximately $9.6 million.
Two days ago (June 24), Metaplanet announced that its board had approved the purchase of $70 million worth of Bitcoin using proceeds from the second issuance of secured corporate bonds. According to the company’s announcement, these bonds carry an annual interest rate of 0.5% and are expected to be paid on June 26, 2024, with maturity on June 25, 2025.
Driven by positive news, Metaplanet’s stock price surged by 360% within two months since shifting towards Bitcoin investments, reaching ¥92 from ¥20 on April 1. The stock’s peak occurred on June 13 at ¥112. As of June 25, Metaplanet’s market capitalization reached ¥16.15 billion (approximately $101 million).
This upward trend in Metaplanet’s stock price closely resembles MicroStrategy’s post-Bitcoin investment trajectory. Since 2020, MicroStrategy’s chairman and co-founder Michael Saylor has been purchasing Bitcoin, resulting in significant stock price growth.
Filling the Void
Currently, Metaplanet’s vision and ambitions extend beyond Bitcoin investment to diversifying development opportunities within the Bitcoin ecosystem. When asked about Japan’s plans for a Bitcoin ETF, Gelovich stated, “Currently, Japan lacks a Bitcoin ETF, meaning Japanese investors cannot conveniently invest in Bitcoin through brokerage accounts. Therefore, Metaplanet is committed to filling this gap.”
He emphasized, “Unlike ETFs, as an operating company, Metaplanet can access capital markets and raise funds on terms favorable to shareholders. As Japan’s first publicly traded company strongly supporting Bitcoin, we have the capability to drive Bitcoin’s acceptance globally through business expansion and information dissemination.”
In summary, Metaplanet’s strategic adjustment can be seen as a bold and innovative endeavor, albeit one potentially facing challenges in the future. Over time, the market will witness how Metaplanet continues to create value in its Bitcoin journey; its exploration has only just begun.
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