Metaplanet slides 17% this week as CEO's public note fails to ease investor concerns

Metaplanet shares fell by nearly 10% on Tuesday, extending a two-day slide that followed a public note from CEO Simon Gerovich that investors said left key questions unanswered.

The Tokyo-listed bitcoin treasury company dropped 9.9% to 244 yen ($1.56) on Tuesday. The stock had already fallen 7.5% on Monday, the first trading session after Gerovich published his note on Sunday. Over the two sessions, the company's stock has lost about 17%.

The stock's decline came as bitcoin (BTC) traded mostly flat over the past three days. BTC is down 1% in the past day, trading at $78,464.

Current controversies surrounding the Japanese firm stem from its Series 10 plan, adopted in December 2022, before its shift to a bitcoin treasury strategy in April 2024. The plan established an award pool that adjusted to equal 20% of the company's fully diluted share count, rather than fixing the number of underlying shares.

As the company issued and sold shares to purchase bitcoin, the executive option pool grew from roughly 46 million shares to about 319 million. Investors and critics pointed out that the award pool grew as existing shareholders were diluted by repeated equity raises.

Gerovich’s ties to MMXX Ventures, a disclosed Metaplanet shareholder, also drew scrutiny. Company filings have said he indirectly held a majority of MMXX’s voting rights, raising conflict-of-interest questions.

Gerovich's response

In response to the growing controversies, Gerovich wrote on X that Metaplanet "had not done a good enough job" communicating the company's plans and structure with shareholders.

The Metaplanet CEO said the company made changes to the option pool on Aug. 18, removing the adjustment provision and freezing the option pool. The August disclosure shows that the pool now has a fixed count of 319.46 million potential shares, with the exercise price maintained at 10 yen per share. A five-year lock-up was also placed through Aug. 17, 2031. 

"We are continuing to review our governance and compensation policies and will share any updates when that work is complete," Gerovich added.

On MMXX, Gerovich said he is a “significant but non-majority shareholder" of its parent company. He said he is not a director or officer of MMXX and has “no role" in its investment or trading decisions.

Backlash continues

Gerovich's note did not resolve issues that investors had raised, as seen in the replies on X.

Many took issue with how the August amendment stopped further growth of the option pool but left it at the expanded size. Some have called for the company to roll back or cancel the additional rights of roughly 273 million shares.

"There is no choice but to cancel the additional 273 million shares and replace them with a new incentive program applied retroactively," wrote X user "Ragnar."

Another investor, who wrote under the pseudonym "The Bitcoin Pharaoh," pointed out that Gerovich exercised 92,000 Series 10 units and received more than 64 million shares ten days after the option pool was capped.

"Admitting the structure was wrong and keeping what it produced is a contradiction, and no amount of communication resolves it," the X user wrote. 

Questions about MMXX also remain. Some investors pointed to earlier Japanese filings that described Gerovich as holding indirect majority voting rights in MMXX and treated the vehicle as affiliated with officers and close relatives. 

They have asked the company to name MMXX's owners and state whether Gerovich or affiliates have benefited economically when MMXX sold Metaplanet shares during the 2024 rally.

The Block has reached out to Metaplanet for further comment.