Sequans Bets Big on Bitcoin: $200M Share Offering

Sequans Communications (NYSE: SQNS), a semiconductor company based in Paris and traded on the New York Stock Exchange, has announced its plan to generate up to $200 million through an “at-the-market” equity offering. The primary use of the raised capital is to acquire Bitcoin, aligning with the company’s long-term treasury strategy.

This new financing initiative will support the initial phase of Sequans’ strategy for establishing its treasury foundation. According to CEO Dr. Georges Karam, the company plans “to use it judiciously to optimize treasury,” as stated in a statement released on Tuesday.

The company’s recent SEC filing authorizes Sequans to issue American Depositary Shares (ADS) at its own discretion. ADSs serve as certificates that facilitate trading of foreign company shares by US investors on American stock exchanges.

Earlier in July, Sequans secured $189 million through secured convertible debentures and warrants. This brings their total funding raised recently to approximately $376 million.

Presently, Sequans holds over 3,000 Bitcoin, which is currently valued at around $331 million. This substantial holding positions Sequans as one of the largest corporate Bitcoin owners in Europe, second only to Germany’s Bitcoin Group SE. Their stated aim is to possess 100,000 Bitcoin by 2030.

‘Scalable if tailored’

According to Dan Dadybayo, research and strategy lead at Unstoppable Wallet, using equity to purchase Bitcoin “undoubtedly dilutes existing shareholder value and more closely aligns the company’s overall value with the inherent volatility of Bitcoin.” Dadybayo shared his perspective with Decrypt.

However, he suggests that the ultimate success will depend heavily on effective execution.

He explains that “Bitcoin acquisitions funded by equity function less as purely speculative investments and more as a leveraged exposure strategy. Shareholders agree to the dilution in exchange for aligning with Bitcoin’s long-term growth potential.”

Furthermore, Dadybayo stated that “smaller companies can innovate using structured financial arrangements, options strategies, or Bitcoin-backed deals to effectively build up their holdings. There isn’t a one-size-fits-all approach, but the model can be scaled if it is customized to fit the specific situation.”

Dadybayo also emphasizes that the true risk lies not in short-term price fluctuations, but rather in “the company’s ability to maintain operational discipline and avoid excessive risk-taking during economic downturns.”

While Sequans possesses the capacity to “acquire Bitcoin at a significant scale relative to its overall size,” he highlights that it lacks “the necessary financial resources to weather extended periods of market decline without negatively impacting shareholder value.”