In an intriguing turn of financial strategies, Tom Lee is contemplating the inclusion of Semler Scientific in his renowned 'Granny Shot' investment portfolio. As detailed on CoinDesk, the medical technology firm recently ventured into bitcoin treasury management with less-than-stellar initial outcomes, witnessing a near 50% collapse in their stock price since starting to accumulate bitcoin in 2024.
At first blush, the scenario at Semler Scientific paints a stark picture: a medical tech firm pivots to a bitcoin-based treasury strategy only to see its stock trampled and its mNAV dip below 1.0. This is particularly thorny since Semler uses capital raised via share sales to fund its bitcoin accumulation. With shares trading below the total value of its bitcoin holdings, further sales would injure, rather than aid, shareholder value by diluting their shares without a corresponding increase in worth.
This predicament throws a spotlight on the inherent risks companies face when veering into the volatile crypto markets without a cushion or a clear strategic advantage. For Semler, whose initial foray into bitcoin investment seemed a nifty side hustle, the result has been anything but profitable. The subsequent mNAV downturn makes it an unattractive candidate for issuing more shares, effectively bottlenecking its ability to procure more bitcoin unless it adjusts its strategy.
Moreover, the situation underscores a larger trend observed across various sectors where companies have leapt headlong into cryptocurrency investments or integrations. As discussed in a recent Radom Insights post about the pitfalls of hasty adoption of crypto strategies, the allure of quick gains can sometimes blindside firms to the intricate dynamics of crypto markets. Like Semler, others might find that adding cryptocurrencies to their treasury might not always align with traditional business objectives or investor expectations.
For investors like Tom Lee, the 'Granny Shot' strategy - typically a low-risk, high-reward approach - would necessitate a rigorous assessment of Semler's current financial health and its short-term capacity to leverage its bitcoin holdings into a stable recovery. This might involve waiting for a more favorable market condition or possibly restructuring its investment approach to align its core business with its treasury activities.
In essence, Semler Scientific’s foray into bitcoin serves as a cautionary tale about the complexities of integrating cryptocurrency into traditional business models. It’s not sufficient to merely stockpile bitcoin in hopes of a bullish market rally; a nuanced strategy that accommodates the fluid nature of crypto-assets, while still championing the core business fundamentals, is essential. As such, prospective investors should approach such scenarios with a blend of strategic patience and a keen eye for evolving market dynamics.
