Metaplanet President Simon Gerovich has defended the company’s shift toward issuing preferred shares.
His remarks come amid tightening liquidity conditions and waning market enthusiasm for “microstrategy-style” companies.
Metaplanet President Makes a Case for Preferred Share Strategy
Simon Gerovich says the company’s stock strategy is part of a capital optimization phase to boost Bitcoin holdings per share without diluting common shareholders.
The Japanese firm, often dubbed Asia’s MicroStrategy, recently suspended several series of stock acquisition rights, signaling a strategic recalibration.
Investors, however, are divided over the timing of the move, given Metaplanet’s current valuation compression below 1x its modified Net Asset Value (mNAV).
Gerovich outlined Metaplanet’s reasoning in a post on X (Twitter), describing preferred shares as a “more powerful tool” than common stock issuance.
Unlike equity raises, which increase Bitcoin reserves but also expand share count and cause dilution, preferred shares allow the company to raise capital at a fixed dividend rate.
“The goal is to continue increasing Bitcoin holdings per share while efficiently utilizing capital…If the rate of increase in Bitcoin exceeds the cost of capital, that difference acts as compound interest, increasing Bitcoin per share and ultimately benefiting common shareholders,” Gerovich wrote.
He introduced a simple formula comparing Bitcoin growth and dividend rates. If Bitcoin compounds at 30% annually and preferred dividends are set at 6%, the long-term outcome, he argued, would be equivalent to issuing new stock at an mNAV of 8.6x, effectively simulating dilution-free growth.
Gerovich added that Metaplanet remains effectively debt-free and among the healthiest financial bases in Japan.
Reportedly, the firm plans to introduce Bitcoin-backed yield instruments into Japan’s credit markets.
Market Questions and Valuation Pressures
Not all investors are convinced. One user questioned the practicality of issuing preferreds while trading below 1x mNAV:
“If you’re trading below mNAV, do you really want to issue preferreds in that moment? How do you pay the dividend?” they posed.
Analysts like Adam Livingston noted that Metaplanet’s mNAV compression mirrors that of MicroStrategy’s in early 2022, about 18 months after adopting its Bitcoin treasury model.
“The capitulations lately have shown that most retail does not have the stomach for a 125 vol asset,” Livingston wrote, arguing that the market cycle is testing conviction rather than fundamentals.
Still, broader sentiment across the digital asset treasury sector remains fragile. AB Kuai Dong observed that several publicly listed companies tied to Bitcoin reserves now trade at mNAV levels below one, reflecting fading risk appetite after a summer of speculative excess.
Strategic Pivot and Future Outlook
Metaplanet suspended its 20th–22nd series of stock acquisition rights earlier this month, reflecting its focus on capital discipline.
“We are optimizing our capital raising strategies in our relentless pursuit of expanding Bitcoin holdings and maximizing BTC yield,” Gerovich stated on October 10.
Despite market compression, traders like Lavan Pathmanathan remain cautiously optimistic, pointing to technical support levels.
Nonetheless, Metaplanet’s thesis now hinges on Bitcoin outpacing its cost of capital. This bet aligns with the firm’s vision to transform Japan’s credit markets through Bitcoin-based financial products.
Will the preferred stock route prove visionary or premature? Sentiment suggests that this hinges on Bitcoin’s ability to sustain compound growth in a tightening global liquidity cycle.
