BTCS Inc (OTCMKTS:BTCS) shares popped higher to start this week after a steady decline-slash-consolidation over the past two months. And we thought it was a good chance to check up on this bitcoin play. The key catalyst to the action was the company’s recent shareholder letter, which was very revealing and worth a read for those interested in the name.
The opening paragraph really goes a long ways toward setting the tone: “Our decision to focus our business around blockchain technologies in 2015 has proven to be a valid thesis with prescient timing, yet without the ability to secure sufficient capital in 2016, we were unable to realize the potential from this truly disruptive opportunity.” You can tell right off the top that this is a letter primarily built to sell the market on the reasonable-ness of the company’s cap table machinations, as we will see below. But first off, for those not fully acquainted with this name, let’s take a wide-angle view.
BTCS Inc (OTCMKTS:BTCS) operates a beta ecommerce marketplace. It hosts an online ecommerce marketplace where consumers could purchase merchandise using digital currencies, such as bitcoin, litecoin, and dogecoin. The company was formerly known as Bitcoin Shop, Inc. and changed its name to BTCS Inc. in July 2015. BTCS Inc. was founded in 2013 and is headquartered in Arlington, Virginia.
According to company press materials, “BTCS is one of the first U.S. publicly traded companies focused on digital assets and blockchain technologies. Subject to additional financing, BTCS plans to create a portfolio of digital assets including bitcoin and other “protocol tokens” to provide investors a diversified pure-play exposure to the blockchain space. The blockchain is a decentralized public ledger and could fundamentally impact all industries on a global basis that rely on or utilize record keeping and require trust. BTCS is keenly focused on growth through acquisition and intends to acquire digital assets through open market purchases and participation in initial digital asset offerings (often referred to as initial coin offerings). Additionally, BTCS may acquire digital assets by resuming our transaction verification services business (often referred to as mining) through outsourced data centers, earning rewards in digital assets by securing their respective blockchains.”
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As noted above, BTCS shares recently popped higher to start this week in reaction to a shareholder letter that started off with a clear argument in support of the company’s recent restructuring activities.
Management went on to say: “we spent much of the past year focused on restructuring liabilities to improve our financial position as we seek out acquisition opportunities and execute on our plan to build a portfolio of digital assets. To this end, we successfully exchanged approximately $3.9 million of convertible notes and liquidated damages for fixed-price Series B preferred stock, entered a leak-out agreement with the former note holders, and raised $1 million to settle liabilities and provide working capital… We have taken these steps because we believe the rise of digital tokens as a new asset class has created a tremendous opportunity for us to leverage our experience in the sector. One of our most significant assets in this regard is our seasoned team of industry leaders who are recognized for their deep relationships with key players in the space. Our team’s value is further enhanced by our ability to bridge the gap between public company experience and blockchain expertise, which we believe fills a major talent void in this burgeoning arena.”
The chart shows 15% added to share values of the listing over the past week of action, a bounce that has taken root amid largely bearish action over the larger time frame. That said, BTCS has evidenced sudden upward volatility on many prior occasions. What’s more, the name has seen an influx in interest of late, with the stock’s recent average trading volume running 28% above its longer run average levels.
Now commanding a market cap of $5.63M, BTCS has virtually no cash on the books, which compares with about $2.6M in total current liabilities. BTCS is pulling in trailing 12-month revenues of $512K. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -90.7%. We will update the story again soon as developments transpire. For continuing coverage on shares of $BTCS stock, as well as our other breakout stock picks, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: we hold no position in $BTCS, either long or short, and we have not been compensated for this article.