The meteoric rise of The Blockchain Group has generated significant interest from both investors and analysts. With an impressive performance of 3,823% over the past year, the company stands out in the regulated Euronext Growth market. However, this surge raises questions about the legitimacy and sustainability of this speculative bubble surrounding bitcoins. This text examines the ascent of TBG and the issues surrounding it.
Blockchain Group: a spectacular rise
After navigating financial turbulence, The Blockchain Group, formerly known as Leadmedia, has made a notable comeback in the market. Since its relisting in July 2024 with a valuation of 8 million euros, the company has held its ground, now reaching 600 million euros. This rapid transformation raises questions about the evolution of its business model and investment strategy.
A cryptocurrency-focused strategy
Since emerging from judicial recovery, TBG has adopted a bold approach by accumulating bitcoins (BTC). Inspired by the initiatives of the American company Microstrategy, this strategy has proven effective in the stock market. Despite this performance, it is crucial to note that TBG’s attachment to this cryptocurrency, which is inherently volatile, exposes the company to significant risks.
A valuation disconnected from assets
While the stock price has soared, it seems that TBG’s current market valuation largely differs from the real value of its assets. Indeed, the company’s market capitalization is more than twice the accumulated value of its 1,653 bitcoins and the recently raised funds. This disconnect raises questions about the long-term viability of TBG’s strategy and the expectations of investors.
Colossal fundraising ambitions
At the general meeting on June 10th, TBG considered raising over 10 billion euros additional funds. This ambition, while appealing, could reflect a grandeur delusion and a desire to capitalize on a speculative phenomenon rather than on tangible successes. This quest for funding raises the question of the true drivers of growth for the company.
Wise advice for investors
In light of the mentioned elements, our recommendation would be to sell. The price target is set at €2.50, considering the speculative profile of the company and the uncertainty surrounding its operations. The semi-annual results, the date of which has not yet been specified, will be crucial for further illuminating TBG’s situation.
