Bitcoin treasury firm Sequans Communications has announced a significant move to reverse split its American Depositary Shares (ADSs) in order to maintain its listing on the New York Stock Exchange and attract larger institutional investors. This decision comes as the company looks to meet NYSE compliance requirements and appeal to funds that only invest in stocks trading above certain thresholds.
According to a statement released on Sept. 4, each ADS will soon represent 100 ordinary shares instead of 10, with the adjustment set to take effect on Sept. 17. This move will result in a reduction in the number of outstanding ADSs while increasing the per-share price, aligning with Sequans’ corporate strategy and commitment to its Bitcoin treasury holdings. The company currently holds 3,205 BTC, valued at approximately $355 million, as reported by Bitcoin Treasuries.
Despite the rationale behind the reverse splits, investors have reacted cautiously to the news, with the company’s stock price falling by 5% to $0.80. This decline is part of a trend that has seen the stock plummet by more than 75% since the beginning of the year, according to Google Finance data.
The decision by Sequans to implement the reverse splits has sparked concerns within the Bitcoin community, with some analysts suggesting that the company’s stocks were at risk of being delisted without this measure. Pledditor, a prominent commentator on X, raised questions about Sequans’ future actions, wondering if the company would also be the first to sell off its Bitcoin holdings.
This development underscores the challenges faced by firms that hold Bitcoin on their balance sheets. While larger companies like Strategy (formerly MicroStrategy) have seen their stock prices soar after embracing Bitcoin treasury policies, smaller companies like Sequans face greater risks, especially if their core business underperforms. A recent report from Franklin Templeton highlighted the potential pitfalls for Bitcoin treasury companies, including dilution of equity through new issuance and the negative impact of falling crypto prices on market sentiment.
As the landscape of companies adopting Bitcoin treasury strategies continues to evolve, it remains to be seen how smaller firms like Sequans will navigate the complexities of balancing their core business performance with their cryptocurrency holdings. This move towards reverse splits may be a necessary step for Sequans to maintain its position in the market and attract the attention of larger institutional investors.