In a dramatic shift, shares of KindlyMD Inc., a healthcare company that has recently ventured into Bitcoin investments, plunged by 55% on Monday. This decline followed a cautionary note from CEO David Bailey regarding the anticipated increase in share price volatility, prompting short-term traders to reconsider their positions.
In a letter addressed to shareholders, Bailey outlined the potential for heightened fluctuations in the company’s stock price, stemming from their recent regulatory filing. This filing detailed a $200 million private investment in public equity (PIPE) offering, wherein shares were made available to private investors at a discounted rate. According to Bailey, these developments could lead to increased trading activity, and he advised those seeking short-term profits to exit their positions.
“We expect share price volatility may increase for a period of time,” Bailey stated, emphasizing the importance of aligning the shareholder base with the company’s long-term vision. He added, “For those shareholders who have come looking for a trade, I encourage you to exit.” Following this guidance, the stock closed at $1.24, marking its lowest value since February.
This shift in share value positions KindlyMD’s market cap at $466 million, notably lower than the total value of its Bitcoin holdings, which amount to over $665 million based on the company’s possession of 5,765 BTC. The fall in share price has resulted in a multiple of net asset value (mNAV) of just 0.7, raising concerns among analysts regarding the sustainability of crypto treasury companies as their crypto assets outstrip their market valuations.
The PIPE offering, while aimed at bolstering the company’s upstream capital, has generated skepticism about volatility. Industry experts are closely monitoring these developments, as Bailey’s communication highlighted the potential for increased trading activity to create “a critical opportunity” for KindlyMD by transitioning to a more stable base of long-term investors.
In this context, Bailey celebrated the substantial trading volumes witnessed, with nearly 80 million shares exchanging hands in a single day. He termed Monday a “day of transition” for the company, during which it endeavored to shift from a market dominated by short-term traders to one that could better support its long-term strategies.
Moreover, while the price drop poses questions about the company’s market position, Bailey maintains a firm commitment to KindlyMD’s goal of becoming a leading Bitcoin-native financial institution. He reiterated that achieving this objective requires not only a long-term strategic approach but also innovative thinking and an adaptable execution strategy.
With KindlyMD firmly established within the cryptocurrency landscape, the unfolding events will be significant to watch as they navigate this challenging transitional phase, balancing both volatility and investor alignment in the burgeoning intersection of healthcare and digital assets.
