Original｜Odaily Odaily Daily (＠OdailyChina)
Author | Wenser (@wenser 2010)
Original Title: BNB Reserve Listed Company WINT Delisted, “Hoarding Strategy” Can’t Cure All Ills
No one expected that the “coin hoarding strategy” which has always been regarded as a guiding principle by listed companies would “fail” for the first time. According to a document from the SEC, the US stock BNB treasury company Windtree Therapeutics (WINT) received a notice on August 19 that its common stock will be delisted from the NASDAQ Capital Market and transferred to the OTC market for trading on August 21, due to its stock price staying below $1 for too long, having undergone multiple reverse splits, and not meeting the usual grace period.
Affected by this news, WINT’s stock price fell by 77.21%, currently reported at 0.11 USD, a drop of over 99.98% from its price of over 517 USD a year ago, and even more tragic compared to its peak price of 567,000 USD per share at the beginning of its listing in 2020.
It is worth noting that the company announced the establishment of a BNB strategic reserve in July, and its stock price once rose to $1.28. However, due to long-term sluggish stock prices and the emergence of concept stocks such as the “BNB Treasury Company CEA supported by the Binance system,” it ultimately could not escape the fate of delisting.
This matter also brings a major focal issue in the industry into the public eye: Is the strategy of hoarding coins effective for all listed companies? Odaily will analyze this in this article.
The first delisted “BNB strategy listed company” has emerged, sounding the alarm for the “dual repair of coins and stocks” industry
Public information shows that Windtree Therapeutics Inc. (WINT) is a biotechnology company focused on developing innovative therapies for respiratory diseases, particularly drugs for acute lung injury and cardiovascular diseases, such as istaroxime and aerosolized KL 4 surfactant. The company was founded in 1992 and is headquartered in Pennsylvania, USA. According to its official website, the final results of its istaroxime Phase 2B clinical trial have been released, but the vision of “addressing a significant unmet need in the market” remains a long way off.
As a small biopharmaceutical company, Windtree Therapeutics Inc. has several medical projects that are in the clinical stage, far from commercialization. According to the latest data, the company’s net income for the most recent quarter was -10.64 million dollars, significantly widening the loss compared to -4.04 million dollars in the previous quarter.
On July 16, the company announced that it had signed a securities purchase agreement worth $60 million with Build and Build Corp., with the potential subscription amount increasing to $200 million in the future. The related funds will be used to purchase BNB as the company’s treasury reserves to achieve asset diversification and value creation. At that time, Windtree triggered market FOMO as “the first NASDAQ-listed company to provide direct investment exposure to BNB tokens,” with its stock price soaring to $1.86. On July 25, it again stated that it had signed a new financing agreement of $520 million to buy BNB, but the market response was tepid, and the stock price declined to around $1.
Today, a month later, what they received was a delisting notice from Nasdaq.
NASDAQ rules take effect, Windtree hard to avoid delisting
According to Nasdaq Listing Rule 5550(a)(2), if the stock price of a listed company has been continuously below the minimum bid requirement of $1 for the past 30 consecutive trading days, Nasdaq has the right to take Delisting action (i.e., forced delisting) against the listed company’s stock.
It is worth noting that this is not the first time Nasdaq has issued an “ultimatum” to the company—earlier this year, Nasdaq granted the company a 180-day extension to regain compliance, but it still failed to meet the corresponding requirements on time, thus making it difficult to avoid delisting.
The direct reason for Windtree’s delisting may be attributed to its failure in the competition for “ecological niches.”
The Legitimate Struggle of “BNB Treasury Company”, Windtree Becomes a Victim of Competition
One of the most obvious reasons for Windtree’s delisting is that a better investment target for “BNB treasury companies” has emerged in the market - namely, CEA Industries supported by Binance (later renamed BNB Network Company, with stock code BNC).
On July 28, CEA Industries, a publicly traded company in the US, and 10X Capital announced a $500 million private placement financing to establish a BNB treasury with the support of YZi Labs. It is reported that the two institutions will expand the PIPE issuance scale, with over 140 subscribers participating in this issuance, including investment institutions such as Pantera Capital, Arche Capital, GSR, Borderless, Arrington Capital, Blockchain.com, Hypersphere Capital, and Kenetic, in addition to YZi Labs.
In early August, CEA Industries announced that it has completed a $500 million private placement financing and will change its name to “BNB Network Company,” with the stock code changing to “BNC” on August 6. YZi Labs led the investment, with over 140 institutions participating, including Pantera Capital and Blockchain.com. At the same time, the company appointed former Galaxy Digital co-founder David Namdar as CEO and former California Public Employees’ Retirement System (CalPERS) Chief Investment Officer Russell Read as Chief Investment Officer.
At this point, the legitimate dispute of the “BNB Treasury Company” has come to a temporary end, with BNC emerging as the winner, while WINT has become a “sacrificial piece.”
It is noteworthy that another US-listed company focusing on the “BNB treasury company” concept, Nano Labs, has also participated in CEA Industries’ previous financing, spending nearly 5 million USD to acquire 495,050 shares of Class A common stock, as well as an equal number of 495,050 warrants, with an exercise price of 15.15 USD per share. If all warrants are exercised, Nano Labs will hold up to 990,100 shares of the company. Therefore, with a BNB holding of up to 128,000, Nano Labs has become one of the backers of BNC, thus remaining in the game.
As of the time of writing, the closing price of BNC is reported at 21.02 USD, with a 24-hour increase of up to 8.8%, and a market capitalization reported at 895 million USD; the closing price of Nano Labs (NA) is reported at 4.5 USD, with a 24-hour increase of 4.9%, and a market capitalization reported at 104 million USD. In comparison, the market capitalization of WINT has dropped to around 3.15 million USD.
It is often said that the marketplace is like a battlefield, and this is especially direct and brutal in the stock market.
Industry Alert: The HODL strategy requires preconditions and is not a “stock price perpetual motion machine”
Looking at the delisting of Windtree, it is evident that for most listed companies, a hoarding strategy is not a “universal key” to continuously driving up stock prices. The reason why companies listed on the US stock market and Nikkei, such as Strategy and Metaplanet, can achieve the effect of “dual rise of coins and stocks” has certain prerequisites. In my opinion, the following 3 conditions need to be met:
First, the preferred choice for accumulating coins is BTC. As the “one true god” of the cryptocurrency industry, BTC’s value is relatively stable and more easily accepted by the market and investors. The accumulation strategy is relatively more intuitive and sustainable for boosting stock prices. After all, the current price of over 110,000 for a single BTC has not yet met the target expectations for many traditional institutions and crypto organizations. Looking ahead over the next 5 to 10 years or even longer, BTC still has an expected increase of 50% to over 100%. In the world of cryptocurrencies, it’s all about the “market dream rate,” and BTC’s effectiveness in combating inflation, diversifying risks, and boosting expectations is undoubtedly unique.
Second, the uniqueness of niche competition. In the countless capital markets, competition for niches is undoubtedly brutal. After all, for most industries and investment tracks, the phenomenon of “only knowing the first and not recognizing the second” is too common, especially regarding whether or not there is support from “orthodox institutions.” This presents a completely different concept for market users. Although, in reality, there is not much difference between the investment targets, the impact on market sentiment and long-term judgment is objectively present. Therefore, if you choose to hold coins other than BTC, you need to consider the public recognition, acceptability of the corresponding tokens, and the direct influence of the project parties.
The third point is the support of real business. Unlike various listed companies that have recently gone public through backdoor listings, such as Metaplanet and Cangu Group, these listed companies have real business support. Therefore, they have a stronger resistance to price fluctuations, technical security, and other risk factors, and are less subject to the regulatory constraints of the stock market and even traditional financial market regulators, thus not having to overly consider risks such as delisting. In simple terms, publicly listed companies that can generate their own profits have more confidence in buying coins compared to those that rely on financing to purchase coins.
The delisting of Windtree is merely a reflection of the current stage of industry development, while the emergence of “ETH reserve listed companies” like Bitmine and Sharplink may be the real disruptors of the “over-leveraged game” as stated by Ethereum founder Vitalik. At that time, we will observe whether the “coin hoarding strategy” becomes ineffective for listed companies.
