425: Fold, a Bitcoin Rewards Company, Goes Public via SPAC, Valued at $365 Million

Fold, a Bitcoin payment and rewards company, has gone public via a SPAC, achieving a valuation of $365 million and marking a significant milestone for Bitcoin-focused businesses.

Summary

• Fold, a Bitcoin payment and rewards company, has gone public through a SPAC, with an initial market capitalization of approximately $365 million.
• The company allows users to earn Bitcoin rewards on purchases made with their Fold debit card, which can then be withdrawn to their own wallets.
• Fold has distributed $45 million in aggregate Bitcoin rewards since 2019, which would have been approximately $20 million if distributed in cash, highlighting the appreciation of Bitcoin.
• The company has processed $2 billion in aggregate transaction volume.
• Fold has a treasury of 1,000 Bitcoin on its balance sheet and aims to emulate MicroStrategy's strategy of accumulating Bitcoin.
• Fold is evolving into a comprehensive banking platform, offering services beyond rewards, including checking accounts and Bitcoin investing options.
• The company is planning to expand its services to include credit cards, auto loans, and mortgages collateralized by Bitcoin.

Sentiment

Score: 9

Explanation: The document expresses a highly positive sentiment due to Fold's successful public listing, strong growth metrics, and strategic focus on Bitcoin. The management's comments and future outlook further contribute to the positive sentiment.

Positives

• Fold's public listing is seen as a win for Bitcoin and Bitcoin-focused companies.
• The company has a strong and engaged community.
• Fold's customers are accumulating Bitcoin and increasing their wealth.
• Fold has positive free cash flow on every product line.
• The company is expanding its services to meet the growing needs of its user base.
• Fold's rewards program offers a higher return than traditional cashback cards due to Bitcoin's appreciation.
• The company is focused on building a long-term business within the Bitcoin ecosystem.

Negatives

• The process of going public can be challenging and may make one appreciate the days of being a private company.
• Bitcoin's volatility requires careful timing and optimization when making strategic decisions.

Risks

• The company operates in a highly competitive industry with a changing regulatory landscape.
• Downturns and new entrants could impact Fold's business.
• The company's success depends on the continued adoption and appreciation of Bitcoin.
• The company is subject to the risks and uncertainties associated with forward-looking statements.

Future Outlook

Fold aims to expand its financial services offerings, including credit cards, auto loans, and mortgages collateralized by Bitcoin, to cater to the growing needs of its Bitcoin-focused customer base. The company intends to emulate MicroStrategy's strategy of accumulating Bitcoin and leveraging its balance sheet.

Management Comments

• Will Reeves believes the public listing is a win for Bitcoin and Bitcoin-focused companies.
• Reeves states that Fold is bringing the first pure play Bitcoin financial services company public.
• Reeves mentions that Fold is like a Bitcoin miner that doesn't pay electricity costs or is affected by the depreciation of ASICs.
• Reeves states that the company wants to put a great company to be synonymous with Bitcoin on the public markets.

Industry Context

Fold's public listing highlights the growing maturity and acceptance of Bitcoin-focused businesses in the traditional financial markets. The company's strategy of accumulating Bitcoin on its balance sheet aligns with a broader trend of corporations and even nation-states recognizing Bitcoin as a valuable treasury asset.

Comparison to Industry Standards

• MicroStrategy, with its significant Bitcoin holdings, serves as a benchmark for companies adopting a Bitcoin-focused strategy.
• Coinbase, a major cryptocurrency exchange, is a comparable company in the digital asset space, although Fold differentiates itself by focusing on Bitcoin rewards and financial services.
• El Salvador's adoption of Bitcoin as legal tender provides a sovereign-level comparison for integrating Bitcoin into a financial system.
• The performance of MicroStrategy's and El Salvador's fixed income issuances demonstrates the potential benefits of incorporating Bitcoin into financial strategies.

Stakeholder Impact

• Shareholders will benefit from the company's growth and Bitcoin accumulation strategy.
• Customers will gain access to a wider range of Bitcoin-focused financial services.
• Employees will have the opportunity to work for a growing and innovative company in the Bitcoin space.

Next Steps

• FTAC Emerald and Fold intend to file a registration statement on Form S-4 with the SEC.
• A proxy statement/prospectus will be sent to all FTAC Emerald stockholders.
• The companies will seek approval of the proposed transaction from FTAC Emerald's stockholders.
• Fold plans to release new products on the short term horizon.

Key Dates