Avalanche Treasury stock plunges 73% since debut as company's AVAX holdings lose value

Avalanche Treasury Co. (AVAT), an AVAX-focused digital asset treasury firm, plunged 73% on the Nasdaq since its June 11 debut, following disclosure of operational struggles in its first-quarter results.

AVAT went public last month after completing a $675 million merger with Mountain Lake Acquisition Corp., a crypto-aligned special purpose acquisition company. Its stock fell to $0.50 Wednesday from $1.85 on June 11.

According to a Monday filing with the Securities and Exchange Commission, the operating entity posted a net loss of $26.78 million in the first quarter. It reported a net working capital deficit of $9.06 million at the end of March.

The losses were mainly driven by unrealized losses tied to its crypto holdings, the company said. It held 13.39 million AVAX tokens at the end of March, acquired at a cost basis of $265.3 million. The fair value of AVAX holdings had fallen to just $122.8 million by quarter-end. AVAX is currently trading at $6.7, down 50.8% year-to-date.

'Substantial doubt'

Under the first-quarter financial conditions, the company's management raised "substantial doubt about the company's ability to continue as a going concern within one year," especially as the completion of the SPAC merger appeared uncertain at the time.

However, the company said the merger transaction has since provided access to additional capital and resources. The management claims the resources will support its operations and liquidity needs for at least the next 12 months.

"Based on the improved liquidity profile and the removal of the previously identified uncertainties, management has concluded that substantial doubt about the Company's ability to continue as a going concern is alleviated for the twelve-month look-forward period from the date of the filing of this Form 10-Q," the latest filing said.

The Block has reached out to Avalanche Treasury for further comment.

Avalanche network has attracted more than $1.02 billion in institutional funds and facilitated the tokenization of over $1.65 billion in real-world assets, while supporting more than 550 projects across its ecosystem, according to a company statement released last month.