Fitell’s Solana Treasury Move Results in 21% Drop in Stock Value

• Fitell’s stock dropped 21% after investing $10 million in Solana for its treasury.
• Fitell plans to use 70% of proceeds to buy Solana and grow staking revenue.
• Shares of Fitell have fallen 95% this year, with a major drop in February.
• Solana treasury adoption is growing, with several firms holding significant amounts.

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Fitell Corporation, an Australian fitness equipment company, saw its stock drop 21% on Wednesday after announcing the purchase of over 46,000 Solana (SOL) tokens, worth approximately $10 million. This move is part of a broader strategy to build a digital asset treasury, a decision that was met with skepticism by the market.

The stock closed at $6.65, marking only a slight increase of 0.15% during the regular session. However, after-hours trading showed no improvement, with the price hovering at $6.66. Despite the initial excitement, the announcement did not lead to a positive response from investors.

Fitell Shift to a Crypto Treasury Strategy

The company has recently pivoted from its traditional fitness equipment business to embrace digital assets. As part of this shift, Fitell secured a $100 million convertible note facility, with plans to invest the majority of the funds into Solana.

The company revealed that it would allocate 70% of the net proceeds from these transactions towards buying Solana and increasing its digital asset holdings.

CEO Sam Lu emphasized the company’s long-term vision, stating that it aims to grow its Solana position and generate staking revenue, which will drive value for shareholders. “With committed institutional support, we look forward to expanding our SOL position, in addition to growing staking revenue,” Lu said.

Market Reactions and Fitell’s Struggles

Despite the ambition behind the crypto treasury strategy, Fitell’s stock has been on a downward trajectory this year. Shares have plunged by 95.69%, with a particularly sharp drop in February. Analysts have labeled the company as “overvalued and underperforming,” which contributed to the overall negative sentiment surrounding this latest move into cryptocurrency.

Fitell is not alone in facing market backlash over its crypto-related decisions. This week, other companies, including Helius Medical Technologies and CEA Industries, also saw their stock prices decline after making significant investments in Solana and other digital assets.

Growth of Solana-Based Digital Asset Treasuries

Fitell’s Solana purchase is part of a larger trend among companies adopting Solana into their digital asset treasuries. These treasuries, often referred to as Solana Digital Asset Treasuries (DATs), are growing rapidly, with several firms including Solmate, Helius, and DeFi Development Corp. making similar moves.

The total amount of Solana held by entities operating in Solana-based treasuries now represents about 3% of the coin’s total supply. This growth signals increasing institutional interest in Solana and may drive future price movements. However, despite this institutional interest, the price of Solana has not yet reacted positively to these developments, remaining relatively stable at around $221.83 as of the latest market data.

Fitell’s decision to move into the crypto space and build a Solana treasury reflects a broader shift in corporate finance strategies, where companies are increasingly looking to digital assets as a way to diversify their portfolios and generate new streams of revenue. However, this shift comes with risks, as evidenced by the mixed reactions from investors and the broader market.

 

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