Shares of KindlyMD Inc., the healthcare-turned-Bitcoin holdings company, dropped more than 50% on Monday after its chief executive encouraged investors to sell if they were “scared” of market price changes.
KindlyMD (Nasdaq: NAKA) dropped 55.4% during Monday’s session, closing at $1.24. The downturn is the lowest trading level since February and extended the stock price slide, now 96% from its all-time high.
Trading volume surged to more than 89 million shares, the largest since February 12 when 219 million shares were traded during a late-session rally, according to Yahoo Finance.
In a shareholder letter shared on X late Monday, CEO David Bailey warned NAKA holders of a stock price plummet in the coming days, and encouraged them to “exit” if they couldn’t ride the storm.
“For those shareholders who have come looking for a trade, I encourage you to exit,” Bailey wrote. He later doubled down on the same sentiment on social media, posting that “almost 80 million shares have traded today,” and deeming the selloff “a day of transition” toward long-term investors.
Shares saw a slight 4.8% rebound in after-hours trading and were priced $1.29 at around 6:40 AM Eastern Time Tuesday, according to Google Finance data.
PIPE deal rallies stock, plunge commences on funding day
KindlyMD announced details of a private investment in public equity (PIPE) deal last Friday, although it was signed much earlier in the week. Per the agreement, investors could now purchase shares at a discount and resell immediately beginning September 16, which piled downward pressure on the stock when trading reopened.
The company’s subsidiary Nakamoto Holdings committed to invest up to $30 million in Metaplanet Inc., Japan’s first publicly traded Bitcoin treasury company.
The PIPE may have raised cash for KindlyMD, but it also made shareholders jittery enough to let go of their holdings. NAKA saw a 77.2% uptick during the announcement, sending shares to $8.08. By Monday, that optimism had reversed, with shares tumbling to $1.24, 71% lower than its level five days ago, and 89% in the last month.
Under Nasdaq rules, companies that close below $1 per share for 30 consecutive days receive a notice of non-compliance and are given 180 days to resolve the issue.
KindlyMD traded below $1 frequently in November 2024, and even though this week’s slump has not reached those levels, it is the most sustained pressure since then. The firm is dangerously close to another warning if the share price does not stabilize.
Market value falls below Bitcoin holdings
KindlyMD’s plunge has dragged its multiple of net asset value (mNAV) down to 0.7, and the firm’s market capitalization now sits at $466 million, significantly below the value of its Bitcoin holdings.
According to BitcoinTreasuries.net, the company controls 5,765 BTC valued at more than $665 million. Bailey, however, reiterated that the company’s long-term plan is to continue adding more crypto reserves, admitting that it might come at the expense of negative stock price corrections.
“After more than 13 years of building through Bitcoin’s cycles, including four bear markets with 70%+ drawdowns, we know resilience and discipline separate those who endure from those who fade,” he wrote.
In his communications, Bailey listed KindlyMD’s progress since changing its medical business operations into a Bitcoin-focused firm. He said the company had raised $742 million, completed a corporate merger, and established a treasury of more than 5,700 BTC.
The CEO also talked about a $5 billion at-the-market program launched with the help of eight financial institutions, including TD Securities. KindlyMD closed its first investment into Dutch Bitcoin treasury company Treasury alongside Winklevoss Capital.
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