TD Cowen Raises Price Target for Bitcoin Treasury Firm Smarter Web
TD Cowen increases price target for Smarter Web
TD Cowen has raised its price target for The Smarter Web Company, a firm that holds bitcoin as its primary treasury asset. The bank increased its target to $0.99 (£0.73) from $0.87 (£0.64) after the company announced plans for a new type of stock offering. Bitcoin is a digital currency that companies sometimes hold on their balance sheets instead of cash.
The bank maintained a Buy rating on the company. The new target suggests there is about 90% potential growth from current share prices. Smarter Web shares were trading at approximately $0.52 (£0.385) on the London Stock Exchange on Monday.
Significant figures for Smarter Web
- The new price target is $0.99 per share.
- The company reported an 11.5% year-to-date yield on its bitcoin holdings as of early September.
- Bitcoin was trading near $78,000 on Monday, which is 38% lower than its peak of $126,000.
- Smarter Web sold 178 bitcoin in July to repay a debt obligation.
Features of the proposed MORE shares
The company has proposed an initial public offering (IPO) of perpetual preferred shares under the ticker "MORE." An IPO is when a company sells new shares to the public for the first time. These specific shares are expected to pay a variable-rate dividend every week.
The MORE shares will include liquidation preference and redemption rights. However, investors who buy these shares will not have the right to vote on company decisions. The proposal is intended to broaden the company's funding options and provide a new source of long-term capital.
Analyst views on the capital strategy
Analysts at TD Cowen stated that this move shows increasing maturity in the bitcoin treasury market. They noted that companies are now exploring more complex ways to raise money, such as preferred equity and secured credit facilities. The analysts also expect the company to return to its previous pace of acquiring other businesses in the coming year.
Steps required for the share launch
The proposed share offering cannot move forward immediately. It first requires approval from the company's shareholders. Additionally, the Financial Conduct Authority (FCA), which regulates financial markets in the UK, must approve a prospectus. A prospectus is a formal document that provides essential details to potential investors.