Meliuz Implements Bitcoin Reserve Strategy, Shares Surge 25%

Meliuz, a Brazilian fintech, has adopted a strategy to invest part of its cash reserves in Bitcoin, targeting long-term returns. Following the announcement, its shares surged over 25%. The company plans to allocate up to 10% of its cash to Bitcoin, having already purchased 45.72 Bitcoin for approximately $4.1 million. Analysts view this strategy as a reflection of a global trend toward alternative investments, which may increase interest from investors.

Meliuz, a Brazilian fintech company, has initiated a strategy enabling it to allocate a portion of its cash reserves into Bitcoin. This decision could potentially lead to Bitcoin becoming the primary asset in the company’s treasury. Following the announcement, Meliuz’s shares, which are traded on the São Paulo stock exchange, surged by over 25%.

The company aims to attain “long-term returns” through these Bitcoin investments, drawing inspiration from notable examples such as the U.S.-based Strategy, the largest corporate Bitcoin holder, and Japan’s Metaplanet. According to a securities filing, Meliuz plans to allocate up to 10% of its cash to Bitcoin, having already acquired 45.72 Bitcoin at an approximate cost of $4.1 million.

Founded in 2011, Meliuz originally focused on cashback services for online shopping but has diversified to include physical retail transactions, digital accounts, and credit card offerings. Despite its initial public listing in late 2020, the company has faced challenges, particularly due to Brazil’s elevated interest rates. Nonetheless, it reportedly has net cash exceeding 240 million reais, equivalent to about $41.72 million.

Chairman Israel Salmen emphasized the importance of their strategic shift, explaining, “Allocating a significant amount of our capital to fixed income investments may seem like a prudent strategy, but in practice we believe it represents a significant opportunity cost.” He further stated that the new approach would not only solidify Meliuz’s financial position but could also position the firm as a pioneer within an evolving global financial landscape.

To further enhance this strategy, Meliuz will perform a comprehensive analysis on adopting Bitcoin as a primary strategic asset for its treasury. UBS BB analysts noted that while Meliuz’s strategy is relatively novel for Brazilian corporations, it reflects an expanding global trend towards alternative investments. They concluded that this strategy could differentiate Meliuz in attracting investors seeking cryptocurrency exposure but may also introduce increased volatility to the company’s financial results.

Meliuz’s adoption of Bitcoin as a strategy for part of its cash reserves illustrates a significant shift in its investment approach. With plans to allocate up to 10% of its cash to Bitcoin and the potential for increased returns, Meliuz aims to revitalize its financial standing amidst Brazil’s volatile economic landscape. This move, although risky, may enhance the company’s competitiveness and appeal to a growing market of crypto-oriented investors, positioning it as a leader in financial innovation.

Original Source: www.usnews.com