Shares of KindlyMD Inc., a company transitioning from healthcare to Bitcoin investment, plummeted by over half on Monday following a warning from CEO David Bailey regarding anticipated volatility in share prices. In a letter addressed to shareholders, Bailey advised short-term investors to consider exiting their positions amid the forthcoming fluctuations.
“We expect share price volatility may increase for a period of time,” Bailey stated, as he referred to the company’s recent regulatory filing about a discounted share sale to private investors, which totals $200 million. He emphasized that for those looking solely for quick profits, it might be prudent to exit their investments.
The recent financial maneuver known as a Private Investment in Public Equity (PIPE) allowed KindlyMD to raise capital by offering shares at discounted prices. The filing for this deal has also enabled eligible investors to trade their shares freely, leading to heightened trading activity.
Concerns have been raised by analysts about the increasing number of crypto treasury firms, with many experiencing a situation where their crypto asset values are beginning to exceed their overall market capitalizations. This trend may have influenced Monday’s downturn in KindlyMD’s stock, which closed down 55.4% at $1.24. While the stock did see a slight increase of 4.8% in after-hours trading, it still hits a low point not witnessed since early February, prior to the company’s announcement of its Bitcoin investment strategy.
Bailey viewed the PIPE deal as a pivotal moment, suggesting that the influx of new shares would help to clear out non-aligned investors and create a base of shareholders committed to long-term growth. He referred to this period as a time of transition but remains optimistic about aligning the company with investors who share its vision.
“This transition represents a point of uncertainty for investors; however, we anticipate emerging stronger with a more aligned and convinced group of stakeholders,” he wrote. His sentiments were echoed on social media, where he highlighted the significant trading volume, noting that nearly 80 million shares changed hands on that single trading day.
With this considerable drop in share price, KindlyMD’s multiple of net asset value (mNAV) has now fallen to 0.7. This calculation indicates that the company’s market capitalization, now at approximately $466 million, has dipped below the value of its Bitcoin holdings, which total 5,765 BTC worth over $665 million according to data from BitcoinTreasuries.NET. Despite these challenges, Bailey expressed a steadfast commitment to evolving KindlyMD into a leading Bitcoin-native financial institution, emphasizing the need for a long-term strategy and innovative thinking.
The situation surrounding KindlyMD highlights the inherent risks associated with the intersection of traditional investing and the volatile crypto market. As the company navigates this transition, stakeholders and investors will be monitoring closely for future developments and potential shifts in strategy.
