Benchmark sets Metaplanet price target at 46% above market valuation, projecting continued growth

Benchmark Equity Research set a price target for Japanese bitcoin treasury firm Metaplanet at 2,400 yen ($16.7), which is 46% higher than the current valuation of 1,644 yen.

"In just over a year, the company has transformed itself from a modest hotel business into Japan’s pioneering listed bitcoin treasury company," Benchmark Analyst Mark Palmer wrote. 

The Tokyo-listed company embraced bitcoin in April 2024 and aggressively purchased the cryptocurrency mirroring the blueprint popularized by Michael Saylor's Strategy. As of June 30, Metaplanet held 13,350 BTC, making it the fifth-largest public corporate holder of bitcoin, according to bitcointreasuries.net.

Metaplanet also recently established a U.S. subsidiary to facilitate its global expansion, where its board of directors approved a plan to inject $5 billion worth of capital to drive a globally integrated bitcoin treasury model.

"We believe the shares are poised to continue their upward climb as Metaplanet continues to execute its financing strategy and adds to its bitcoin holdings," Palmer said. "Management’s clear articulation of Metaplanet’s long-term roadmap, including its U.S. market expansion plans, a publicly stated BTC accumulation target, and transparent treasury reporting, has helped build trust among both institutional and retail investors." 

Benchmark added that Metaplanet benefits from Japan's punitive tax treatment on individuals holding bitcoin directly, where a local retail investor could be taxed as high as 55% on income. The company's stock offers Japanese investors exposure to bitcoin without the punitive tax treatment, according to the research firm.

Since April 2024, Metaplanet's stock price rose 5753.5% from 28 yen to currently 1,644 yen, according to Yahoo Finance data, making it one of the world's best performing stocks during the period.

Risks

Meanwhile, Benchmark noted that Metaplanet's business model and valuation are fundamentally tied to Bitcoin's highly volatile price, posing risks of significant downside during market downturns and impacting its ability to raise capital. 

The firm's accumulation strategy relies heavily on frequent stock rights offerings, warrants, and convertible bond issuances, raising concerns about potential significant shareholder dilution, the research firm said.

Furthermore, net asset value (NAV) compression risk exists if capital raises outpace asset appreciation or if bitcoin acquisitions are poorly timed, potentially affecting investor confidence. Finally, Benchmark highlighted execution and compliance risks associated with building U.S. treasury along with regulatory risks in Japan, where shifts in rules could directly limit Metaplanet's bitcoin accumulation strategy.