Metaplanet Stock Rises as ¥25B Buyback Counters Bitcoin Risk

Metaplanet stock recovered on Nov. 2 after the Japanese Bitcoin treasury company disclosed further share repurchases. Shares climbed from ¥238 to close at ¥250, gaining 2.46% despite Bitcoin remaining below $80,000.

The company reported buying back ¥25.27 billion in shares through October. It also announced an early debt repayment and revised funding plans for additional Bitcoin purchases.

Metaplanet Stock Steady After Announcing a Share Repurchase Program

Metaplanet is a top Japanese company that has become the second-biggest Bitcoin holder with 44,000 coins, currently valued at over $3.38 billion.

The stock opened the week lower, moving to a low of ¥238, its lowest level since September 18, and down 33.4% from its September highs.

The initial retreat happened because of the ongoing Bitcoin weakness. Bitcoin was trading at $77,780, down by 11% from its highest point in September. It has remained below $80,000 since the $6.3 billion Binance hack that led to billions of dollars in losses.

Bitcoin treasury companies tend to underperform the market whenever the coin is falling. In this case, the value of its coins dropped from $3.8 billion in September to the current $3.38 billion.

The stock held steady after the company unveiled a new ¥25 billion share buyback, which is equivalent to $160 million. Share repurchases are usually bullish for a company because they help to reduce the amount of outstanding shares, which, in theory, boosts the earnings per share.

These repurchases are usually seen as the opposite of dilution, which has seen the number of outstanding shares increase from 76.2 million in 2022 to 1.28 billion. The company reduced its outstanding shares by over 96.4 million.

At the same time, the company announced a new repurchase program worth ¥60 billion, which will eliminate about 200 million shares.

Bitcoin Price at Risk of More Downside

A key risk that Metaplanet stock faces is that Bitcoin is at risk of more downside. As the chart below shows, the coin gapped lower on October 29 after the Binance hack. It has now moved into a consolidation phase slightly above the 38.2% Fibonacci Retracement level.

The stock has remained below the 50-day Exponential Moving Average (EMA) and the Supertrend indicator. It has also formed a bearish flag pattern. Therefore, there is a likelihood that the coin will drop, potentially to the 50% retracement level of $72,380, which is about 7.13% from the current level.

Such a drop will bring the value of its Bitcoin holdings from the current $3.38 billion to $3.18 billion.

Bitcoin will next react to the upcoming US nonfarm payrolls (NFP) data and the midterm elections. If Democrats win the Senate and the House of Representatives, it means that the CLARITY Act will not be passed. It also means that there will be more investigations into Trump’s activities.

Metaplanet Stock Price Technical Analysis

Technicals also suggest that the Metaplanet stock may be on the cusp of a bearish breakout in the near term. The daily chart shows that the stock has plunged in the past few months and moved below the 50-day moving average.

A closer look shows that the stock has moved below the ascending trendline that links the lowest swings since July this year. The ascending trendline is the neckline of the head-and-shoulders pattern, a common bearish sign.

Therefore, the stock will likely continue to fall, potentially reaching the key support level of ¥200, which is about 20% below the current level. A move above the ¥260 resistance level will invalidate the bearish outlook and signal further gains.

This article provides market information, not investment advice. Stock and cryptocurrency investments involve volatility and potential losses.