Metaplanet’s Bitcoin Flywheel Stalls: Can Preferred Shares and Overseas Fundraising Stabilize the Model or Deepen Shareholder Skepticism?

Metaplanet’s aggressive Bitcoin accumulation strategy, once hailed as a groundbreaking corporate treasury model, now faces a critical juncture. The firm’s “flywheel” capital-raising mechanism—reliant on warrant exercises by key investor Evo Fund—has faltered as its stock price plummeted 54% since mid-2025, compressing the Bitcoin premium from 8x to 2x [3]. This collapse has forced the company to pivot to preferred shares and overseas fundraising, raising questions about whether these tactics can stabilize its Bitcoin treasury or exacerbate shareholder dilution and market skepticism.

The Flywheel Breaks: A Shift to Preferred Shares

Metaplanet’s original strategy hinged on a self-reinforcing cycle: rising share prices would trigger warrant exercises by Evo Fund, generating capital to buy more Bitcoin, which in turn would drive further stock appreciation [3]. However, the stock’s freefall has rendered these warrants unattractive, leaving the company to issue 555 million preferred shares offering 6% annual dividends, capped at 25% of Bitcoin’s treasury value [1]. While this avoids diluting common shareholders, it introduces new risks. Preferred shares are tied directly to Bitcoin’s price, meaning a 30% drop in BTC would reduce the treasury’s value to $1.36 billion, straining liquidity and the firm’s 18.67x over-collateralization ratio against $28.34 million in debt [1].

The preferred shares also reflect a defensive posture. CEO Simon Gerovich described them as a “defensive mechanism” to protect common shareholders from further dilution [4]. Yet, with Bitcoin’s premium compressed, each new equity issuance—whether common or preferred—threatens to erode shareholder value. For every dollar raised, the proportion of Bitcoin held per share declines, amplifying concerns about the model’s sustainability [5].

Overseas Fundraising and Regulatory Tailwinds

To sustain its Bitcoin accumulation, Metaplanet secured shareholder approval for an $884 million overseas share offering in September 2025 [5]. This move leverages Japan’s low-interest-rate environment, which may attract yield-hungry investors to the firm’s preferred shares [1]. Regulatory clarity in Japan—such as reforms to the Financial Instruments and Exchange Act (FIEA)—has also positioned Metaplanet as a leader in corporate Bitcoin treasuries, outpacing U.S. peers like MicroStrategy [6]. However, Japan’s regulatory landscape could shift, with potential tax reforms altering the cost-benefit analysis of leveraged strategies [6].

The firm’s dual-income model—combining Bitcoin holdings with covered call options—generated ¥1.9 billion in Q2 2025, showcasing its ability to monetize Bitcoin’s volatility [1]. Yet, this strategy’s success depends on maintaining a stable Bitcoin price. A prolonged stagnation or decline could compromise the firm’s ability to service preferred dividends, further eroding investor confidence [1].

Liquidity Risks and the Premium Compression Dilemma

The most pressing challenge lies in the Bitcoin premium’s collapse. When a company’s market cap falls below the value of its Bitcoin holdings, equity issuance becomes a double-edged sword. For every new share issued, existing shareholders see their ownership percentage shrink, creating a self-fulfilling cycle of declining confidence [5]. Metaplanet’s current $1.95 billion Bitcoin treasury provides a buffer, but this over-collateralization is contingent on Bitcoin’s price. A 30% drop would not only reduce the treasury’s value but also increase the debt-to-capital ratio, heightening liquidity risks [1].

Analysts warn that the firm’s reliance on preferred shares may not be enough to offset these risks. While the 6% dividend offers a yield, it is tied to a volatile asset. If Bitcoin’s price stagnates, the firm’s ability to generate returns for preferred shareholders—and common shareholders—will be tested [5].

Conclusion: A High-Stakes Gamble

Metaplanet’s strategy represents a high-stakes bet on Bitcoin’s long-term value. Its aggressive accumulation and over-collateralized balance sheet suggest a compelling thesis, but the inherent volatility of Bitcoin and the fragility of its fundraising model underscore the risks. Preferred shares and overseas fundraising may provide short-term liquidity, but they do not address the root issue: the premium compression that has made equity issuance a dilutive force.

For the firm to succeed, Bitcoin’s price must stabilize or rise, restoring the premium and validating the flywheel model. Until then, Metaplanet’s shareholders face a precarious balancing act between growth and dilution, with the market watching closely to see whether this corporate Bitcoin experiment can withstand the test of time.

Source:
[1] Metaplanet's High-Risk Bitcoin Funding Strategy [https://www.ainvest.com/news/metaplanet-high-risk-bitcoin-funding-strategy-premium-collapse-buying-opportunity-drowning-ship-2509/]
[2] Metaplanet achieves 20000 BTC milestone amid shareholder-approved $2.8B treasury growth plan [https://cryptoslate.com/metaplanet-achieves-20000-btc-milestone-amid-shareholder-approved-2-8b-treasury-growth-plan/]
[3] Metaplanet Stock Falls 54% as Bitcoin Funding Strategy faces crisis [https://coincentral.com/metaplanet-stock-falls-54-as-bitcoin-fundraising-strategy-faces-crisis/]
[4] Metaplanet Faces Funding Strain as Stock Tumbles [https://cryptorank.io/news/feed/5e254-metaplanet-faces-funding-strain-as-stock-tumbles]
[5] Metaplanet’s Aggressive Bitcoin Treasury Expansion [https://www.ainvest.com/news/metaplanet-aggressive-bitcoin-treasury-expansion-high-conviction-play-digital-asset-reserves-2509/]
[6] Corporate Bitcoin Treasury Strategies in Japan: Convano's 3 Billion BTC Acquisition [https://www.ainvest.com/news/corporate-bitcoin-treasury-strategies-japan-convano-3-billion-btc-acquisition-macro-hedging-play-2509/]