Twenty One Capital (XXI) Stock: Drops 20% on NYSE Launch Despite $4B Bitcoin Holdings

TLDR

Table of Contents

XXI shares fell 20% in trading debut, closing at $11.42 versus $14.27 SPAC merger price
Company holds 43,514 Bitcoin valued at $4+ billion, third-largest public holder
CEO Jack Mallers promises revenue-generating businesses in brokerage, credit, and lending
Tether, SoftBank, and Bitfinex backed the venture with $850M in capital
Stock recovered slightly to $11.80 in after-hours trading

Twenty One Capital made a rocky entrance to public markets Tuesday. Shares closed at $11.42, down 20% from the $14.27 closing price of Cantor Equity Partners, the SPAC it merged with.

The Bitcoin-focused company opened trading at $10.74. This marked a disappointing debut for one of the year’s most watched crypto offerings.

Bitcoin itself rose 3% on the same day. The disconnect between the cryptocurrency’s performance and XXI’s stock price raised questions about investor confidence.

The company enters public markets holding 43,514 Bitcoin worth over $4 billion. This positions Twenty One as the third-largest public corporate Bitcoin holder behind MARA Holdings and Strategy.

Strike founder Jack Mallers serves as CEO. Major backers include stablecoin issuer Tether, crypto exchange Bitfinex, and Japan’s SoftBank Group.

Unclear Business Plans Spook Investors

Twenty One has not revealed specific operating plans or timelines. This lack of detail appears to have contributed to the first-day selloff.

Mallers pushed back against comparisons to pure treasury companies. “We don’t want the market to think of us and price us as just a treasury asset,” he told CNBC.

The CEO outlined plans to build revenue-generating Bitcoin businesses. Target areas include brokerage, exchange, credit, and lending operations.

When pressed for specifics, Mallers deflected. He said the company would announce details “sooner rather than later.”

Mallers distinguished Twenty One from competitors. He noted Coinbase operates across crypto, not just Bitcoin. Strategy holds Bitcoin but lacks operating products or cash flow.

“We want to live in the intersection of that,” Mallers explained.

Capital Structure and Market Position

The SPAC deal generated $850 million through convertible notes and equity sales. Earlier contributions from Tether, SoftBank, and Bitfinex added several billion dollars in Bitcoin when Twenty One formed last spring.

The company joins a crowded field of crypto treasury firms that launched this year. These businesses follow Strategy’s model of buying and holding crypto while raising capital for more purchases.

Shares gained slightly in after-hours trading, rising 2.2% to $11.67. This gives Twenty One a market value around $4 billion based on outstanding shares.

Mallers expressed confidence in his and Tether’s track record. “We see Bitcoin as the forest through the trees,” he said. “It is the opportunity, and no one is seemingly focused on it.”

The CEO emphasized Twenty One will focus solely on Bitcoin to deliver shareholder value. The company aims to combine treasury holdings with active business operations.

XXI finished after-hours trading at $11.80, showing modest recovery from the day’s lows.

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