A surge of new bitcoin treasury companies is flooding the market, with many following the playbook set by Strategy’s (MSTR). As these firms multiply, questions arise about how to accurately value them and compare their performance.
One key metric highlighted by bitcoin research expert Greg Cipolaro is the premium these companies trade at relative to their net assets, which include bitcoin holdings, cash, and enterprise value excluding bitcoin. Essentially, to determine this premium, investors add up the company’s bitcoin, cash, and enterprise value (minus bitcoin holdings), then subtract obligations such as debt or preferred stock. This premium allows these firms to convert their stock into bitcoins, effectively acting as a currency exchange for shares and bitcoins.
The popular valuation metric used is mNAV, which measures a company’s market valuation relative to its bitcoin treasury. An mNAV above 1.0 indicates investors are willing to pay a premium for exposure to the stock compared to the bitcoin it holds. Conversely, an mNAV below 1.0 suggests the stock is worth less than the company’s bitcoin holdings.
However, Cipolaro warns that relying solely on mNAV is insufficient for analyzing these firms’ true strengths and weaknesses. A more comprehensive picture emerges when using additional metrics such as NAV, mNAV based on market capitalization, enterprise value, and the equity premium to NAV.
For example, recent data shows that Semler Scientific and Trump Media have the lowest equity premiums among eight companies measured, at -10% and -16%, despite their mNAVs exceeding 1.1. Interestingly, even as bitcoin’s price climbs from around $105,000 to $108,500, these stocks remain relatively unchanged, whereas MicroStrategy (MSTR) gains nearly 5%.
This market dynamic underscores the complexity of valuing bitcoin treasury firms and highlights the importance of using multiple metrics to gauge their real worth in the evolving crypto landscape.
