Alpha Modus Stock Plummets After Announcing Massive Bitcoin Deal
Alpha Modus stock plummeted by 25% after the company announced its plan to issue over 10 times its existing share count in exchange for Bitcoin. The Nasdaq-listed firm said it would receive more than 3,170 BTC from 10 non-US investors in exchange for 51.62 million Class A shares and warrants covering another 51.62 million shares. This agreement values the Bitcoin at $71,000 each, implying about $225.1 million of consideration.
The transaction has not yet closed, meaning the Bitcoin has not been transferred and the new securities have not been issued. Alpha Modus had approximately 4.99 million Class A shares outstanding under the agreement's August 24 capitalization table. Issuing the initial 51.62 million shares would lift that total to roughly 56.61 million and reduce the pre-deal shares to about 8.8% of the enlarged base.
Chief Executive William Alessi said the company had considered a Bitcoin strategy when prices were near record highs but chose not to proceed, effectively betting that Bitcoin's 30% retreat has created a better entry point than last year's highs. However, early indications show that investors have been less convinced so far, as shown by the steep decline in the firm's stock following the move's announcement.