NYDIG's Global Research Director Greg Cipolaro stated that the cryptocurrency industry should stop using the popular market capitalization to net asset value ratio (mNAV) metric, as it is inaccurate and misleading to investors.
"Industry's definition of 'mNAV' needs to be deleted and forgotten," Cipolaro wrote in a report on Friday. "'Market cap to Bitcoin/digital asset value ratio,' the original definition of mNAV, is a useless metric."
He added that mNAV does not take into account treasury companies that engage in other businesses beyond buying and holding large amounts of cryptocurrency, nor does it properly reflect the company's convertible debt.
Traders and investors use mNAV (sometimes referred to as net asset value multiple) to determine company value and when to buy or sell its stock by comparing the value of cryptocurrency holdings to market capitalization.
Companies whose cryptocurrency holdings are valued higher than their market capitalization are considered to be trading at a discount, while those with a market capitalization exceeding their cryptocurrency holdings are trading at a premium.
"To put it positively, it's misleading; to put it negatively, it's dishonest," Cipolaro said.
According to Cipolaro, there are two reasons why mNAV "does not give" the necessary recognition to crypto treasury companies that have operations and assets outside of cryptocurrency, such as software sales by Strategy companies.
"In the game of increasing digital assets/shares, NAV (net asset value) is important, not enterprise value, let alone market cap," Cipolaro wrote.
He stated that if a crypto treasury company can generate returns (another key metric for investors), it can issue stock at a premium above its net asset value.
Cipolaro believes another reason to stop using mNAV is that the metric uses "assumed shares outstanding," which may include convertible debt that has not yet been converted, such as loan transactions.
"When you strip away the convertible debt portion, things fall apart," he wrote. "From an accounting or economic perspective, automatically treating convertible debt as equity is incorrect."
Convertible debt holders "will demand cash rather than stock in exchange for their debt," Cipolaro said.
"For DAT (Digital Asset Treasury), this is a heavier liability than simply issuing stock," he added, as convertible debt is "essentially volatility harvesting," while crypto treasury companies "are incentivized to maximize their equity volatility."
Before Cipolaro's report was released, Strive announced on Monday the acquisition of Semler Scientific, marking the first acquisition of a peer by a crypto treasury company.
In the deal, Semler shareholders receive 21.05 shares of Strive stock for each share of Semler stock they hold, while Strive shareholders "receive an NAV/share boost—essentially 'yield'," he explained.
Cipolaro stated that the deal "works for both parties, although it requires some effort," as Semler shareholders "have a stock valuation higher than" the existing stock and the per-share net asset value of the new company formed in the merger.
As of Friday, Strive's net asset value per share was $1.14, while the post-merger company's NAV per share could be $1.32.
"As for the ultimate trading price of this stock, that's harder to predict," Cipolaro said. "It will ultimately depend on investors' premium or discount on the stock relative to NAV."
Related: Crypto treasury companies hit hard, underperforming their held spot assets
Original article: “NYDIG: Crypto Industry Must Stop Using 'Misleading' mNAV Metric”
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
