Ethereum reserve company Bitmine (stock code BMNR) triggered panic selling after revealing the costs and unlocking timelines of early investors, leading to a two-day decline in stock price. The company announced that the board has approved a stock repurchase plan to repurchase up to $1 billion of its outstanding common stock. Can’t stand to see the company's stock price being low, is Bitmine stepping in to protect the market while also taking advantage of the low prices?
(Early investors dumping shares? Examining the Bitmine case to assess the valuation of crypto reserve companies.)
Bitmine announces a billion-dollar stock repurchase plan.
Bitmine announced that the board has approved a stock repurchase plan to repurchase up to $1 billion of its outstanding common stock. This new stock repurchase plan is open-ended, allowing the company to repurchase its stock from time to time in the open market and through negotiated transactions.
BitMine Chairman Tom Lee stated:
On our path to achieving a 5% alchemy with ETH, sometimes the best expected return on our capital may be to repurchase our own shares.
Tom Lee explained in a speech two days ago the five ways BitMine can increase its per-share Ethereum, including 'considering acquisitions if a company's NAV is close to its Ethereum value,' unexpectedly including the operation of its own stock.
(Tom Lee discusses Ethereum alchemy, BitMine's stock price plummets 12% as valuation is recalibrated.)
Too much cash and the stock price too cheap? BMNR still dropped nearly 9% yesterday.
The company usually conducts its own stock repurchase based on the following situations:
The company has a large amount of idle cash or funds and believes there are currently no better investment opportunities.
Management believes the company's stock price is below its true value, thus increasing market confidence and stock price through repurchase.
The company reduces the proportion of external holdings through repurchase, decreasing the risk of hostile takeovers.
BitMine claims it has over $401.4 million in undistributed cash. As of July 28, the total issued fully diluted common stock is 121,739,533 shares. The combined asset net value (net asset value per share) of cash and cryptocurrency is $22.76. Based on yesterday's closing price of $32, the mNAV is only 1.41 times. Perhaps the company wants to flexibly use its cash on hand to repurchase its own stock when the stock price is low, which can not only boost investor confidence but also present opportunities to profit from the price difference in buying and selling.
BitMine also announced the repurchase of ETH, bringing its total holdings to 625,000 coins. However, after the announcement of the repurchase news last night, its stock price did not show improvement, closing down 8.86%. Over the past two days, it has lost 20% of its market value.
This article discusses Bitmine's announcement of a billion-dollar stock repurchase plan. Is BMNR's stock price too cheap? First appeared in Chain News ABMedia.
