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Shares of Japanese firm Metaplanet Inc. surged by around 10% today following the announcement of intentions to establish a capital allocation policy, a $500 million credit facility, and a share buyback program.
The company mentioned that its board of directors approved the new capital allocation policy on October 28. This newly adopted strategy aims to enhance the firm’s long-term value and maximize shareholder returns.
The company, often referred to as “Asia’s Strategy,” announced that the new credit facility will be utilized to expand its Bitcoin holdings and finance a significant share buyback program aimed at enhancing the firm’s Bitcoin-per-share ratio.
Metaplanet currently holds more than 30,800 BTC, making it one of the largest corporate holders of the cryptocurrency in Asia.
Metaplanet develops a new strategy to increase BTC yields in its operation
Analysts researched Metaplanet’s new strategy and discovered that the company adopted it after encountering a drastic drop in its overvaluation. According to their analysis, the value declined below the worth of its Bitcoin assets, mNAV.
As earlier reported by Cryptopolitan, the shares of Metaplanet had recently plunged by about 70%, reducing its combined market value and debt to a point where it was under the total worth of its Bitcoin stash. The company’s own metrics showed an mNAV of 0.99 in mid-October, highlighting that the market now values Metaplanet at less than its cryptocurrency reserves.
Meanwhile, the recent decrease in Bitcoin prices, recording $102,000 amid increased market volatility, resulted in significant fluctuations in mNAV. Moreover, both institutional and retail investors made large sell-offs of Metaplanet stock.
To address these concerns, Metaplanet emphasized that its new capital allocation plan will focus on three key principles. To begin with, it will promote the effective use of perpetual preferred shares to enhance Bitcoin yields. Secondly, the plan will halt raising money through common share sales when the mNAV drops below 1, and third, it includes share buybacks to increase the Bitcoin yield further.
When reports inquired about the sources of funds for share repurchases, Metaplanet noted that the funds would be raised from various sources, including credit facilities, earnings from the company’s Bitcoin-related activities, and proceeds from issuing preferred shares.
Following this announcement, data from reliable sources reveal that Metaplanet’s stock surged more than 10% to reach 519 JPY before experiencing a slight pullback on Tuesday this week.
At this time, the stock price ranged from a low of 464 JPY to a high of 541 JPY within the last 24 hours. On the other hand, the trading volume skyrocketed to over 75 million shares, surpassing the average volume of 49 million shares.
Metaplanet seeks to repurchase 150 million shares
Recently, reports indicated that Metaplanet’s stock has surged, surpassing a 25% increase in just one week. This surge in stock above the downward trendline has pushed the year-to-date return close to 53%. The impressive outcome has encouraged the board of directors to approve a share buyback plan today.
The President of Metaplanet Inc., Simon Gerovich, commented on the situation. He said this buyback will improve capital efficiency and increase the yield on Bitcoin. Gerovich also hinted that the firm seeks to repurchase 150 million shares by October 29, 2026.
He added, “The Board approved a credit facility to allow flexible execution as part of the company’s capital allocation strategy.”
This credit facility allows Metaplanet to borrow up to $500 million. With these funds, the company can purchase more BTC, invest significantly in its Bitcoin income operations, or share repurchases.
Currently, Metaplanet holds about 30,823 BTC worth nearly $3.5 billion, with a YTD BTC yield of 496.4%. Moreover, the market NAV is 1.05, and the unrealized profit from Bitcoin purchases is $281 million.
This was after the company reduced its BTC purchase because it had attained its goal for the year and aims to hold 210,000 BTC by 2027.
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