Bitcoin Treasury Firm Sequans Communications said it would reverse split the US Depositary Stock (ADS) and list it on the New York Stock Exchange and continue to appeal to large institutional investors.
In a September 4th statement, the company confirmed that each ad will soon represent 100 common stock rather than 10. The adjustment will take effect on September 17th, reducing the number of unpaid ads while increasing the price per share.
In doing so, Sequans aims to appeal to funds that meet NYSE compliance requirements and allocate capital to stock transactions that exceed certain thresholds.
Span also linked the measure to a corporate strategy, noting that the company continues to commit to holdings by the Bitcoin Treasury. According to Bitcoin Treasuries, Sequans manages 3,205 BTC, which is valued at around $355 million.
Despite the explanation, investors responded cautiously to the reverse division, with the company’s shares falling 5% to $0.80 at reporting time.
This has continued the yearly trend since January, when stocks have fallen by more than 75%, according to Google Finance data.
Bitcoin Community Concerns
The move, along with X’s well-known commentator Pledditor, raised concerns within the Bitcoin community, claiming that Sequans stocks are at risk of delisting without action.
The analyst said:
“(Sequans is) the first Bitcoin finance company was forced to do reverse splits due to poor price performance. Will they also become the first company to throw away coins?”
The development highlights the contrasting fate of companies holding Bitcoin on their balance sheets.
The strategy (formerly the micro-tactics) skyrocketed as the stock’s value rose after Michael Saylor embraced this approach in August 2020.
Its success encourages several small businesses, like Span, to adopt similar financial policies this year.
However, analysts warn that these types of small businesses face greater risk, especially when their core businesses are underperforming.
The recent Franklin Templeton Report highlighted these challenges by explaining that if the market-to-asset value ratio of a Bitcoin finance company falls below 1, new share issuance will dilute and limit the company’s ability to raise capital.
He added that a decline in crypto prices could lead to a self-enhancing cycle in which companies sell assets to protect their stock prices, further reducing market sentiment.
