425: Fold App Set to Merge with FTAC Emerald, Eyeing Public Listing and Bitcoin Expansion

Fold, a Bitcoin rewards app, is nearing a merger with FTAC Emerald Acquisition Corp., aiming for a public listing and further expansion of its Bitcoin-focused financial services.

Summary

• Fold, a personal finance app that rewards users with Bitcoin, is in the process of merging with FTAC Emerald Acquisition Corp. through a SPAC transaction.
• The merger is expected to be completed early next year, with a shareholder vote next week to extend the timeline for the deal.
• Fold has given away over $70 million in Bitcoin rewards since 2019 and currently holds over 1000 Bitcoin in its treasury.
• The company's business model involves partnerships with merchants to offer Bitcoin rewards on purchases, funded by the merchants themselves.
• Fold aims to be a wholesale replacement for traditional banking, offering a debit card, FDIC-insured cash accounts, and soon a credit card, all integrated with Bitcoin rewards.
• The merger values Fold at $365 million, with potential for an increase based on Bitcoin's price appreciation.
• The company is focused on driving more Bitcoin into the company on a Bitcoin per share basis.
• Fold's customer base is primarily around 35 years old, higher income, and actively looking to make long-term financial decisions, including Bitcoin.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for Fold, highlighting its strong position, innovative business model, and growth potential. The management's comments are optimistic, and the company is well-positioned to benefit from the increasing adoption of Bitcoin.

Positives

• Fold has a strong position with over $100 million worth of Bitcoin in its treasury.
• The company's business model is designed to be accretive to the business in Bitcoin terms.
• Fold's customer base is highly engaged and demanding of new products and services.
• The company has a clear vision and principles, with a focus on transparency and community engagement.
• Fold's referral program is a significant growth driver, with a low customer acquisition cost.
• The company is well-positioned to benefit from the increasing adoption of Bitcoin.
• Fold's platform allows users to earn Bitcoin rewards on everyday purchases and bills.
• The company is focused on driving more Bitcoin into the company on a Bitcoin per share basis.

Negatives

• The merger is not yet complete and requires a shareholder vote to extend the timeline.
• The stock will be traded on the OTC until the merger is completed.
• The company is subject to the SEC's timeline for approval.
• The company is currently only available to US customers.

Risks

• The merger may not be completed in a timely manner or at all.
• The merger may not be completed by FTAC Emerald's business combination deadline.
• The failure to satisfy the conditions to the consummation of the proposed transaction.
• The failure to realize the anticipated benefits of the proposed transaction.
• The effect of the announcement or pendency of the proposed transaction on Fold's business relationships.
• The outcome of any legal proceedings related to the business combination agreement.
• The ability to maintain the listing of FTAC Emerald's securities on the NASDAQ.
• The ability to address the market opportunity for Fold's products and services.
• The risk that the proposed transaction may not generate the expected net proceeds for the combined company.
• The ability to implement business plans and other expectations after the completion of the proposed transaction.
• The risk of downturns, new entrants and a changing regulatory landscape in the highly competitive industry in which Fold operates.

Future Outlook

Fold intends to expand its product offerings, including a credit card, and continue to grow its Bitcoin treasury. The company is also exploring opportunities to expand internationally.

Management Comments

• We've really been at the earliest movement to make Bitcoin accessible to everybody.
• We have one of the largest retail and merchant rewards networks out there.
• We are a asset-rich company, which is very rare for SPAC and even newly IPOing company where we have over $100 million worth of Bitcoin in our treasury.
• Bitcoin is our true opportunity cost.
• Fold is the best avenue to be able to provide that way to save.
• We are operating from the principle that Bitcoin is competing for the largest TAM in existence and that is money.
• We are firm believers in savings in cold and checking in Fold.

Industry Context

This announcement comes amid increasing interest in Bitcoin and cryptocurrency, with a growing number of companies exploring ways to integrate these assets into their business models. The merger positions Fold to capitalize on this trend and compete with traditional financial institutions.

Comparison to Industry Standards

• Fold's customer acquisition cost is significantly lower than traditional financial institutions, which can range from $200 to $1000+.
• Fold's strategy of accumulating Bitcoin on its balance sheet is similar to MicroStrategy and Semler, but Fold is a top 25 holder of Bitcoin among public companies.
• Unlike traditional banks, Fold is focused on integrating Bitcoin into its core services, offering rewards and savings opportunities.
• Fold's approach of building a customer layer and integrating with partners for custody and insurance is a common strategy in the fintech space.

Stakeholder Impact

• Shareholders of FTAC Emerald will vote on the merger and the extension.
• Fold customers will benefit from the continued development of the platform and new product offerings.
• Employees of Fold will be part of a publicly traded company.
• Merchants will continue to benefit from the partnership with Fold.
• The merger will provide Fold with additional capital to expand its business.

Next Steps

• Shareholder vote next week to extend the timeline for the merger.
• Completion of the merger early next year.
• Continued expansion of product offerings, including a credit card.
• Further growth of the company's Bitcoin treasury.
• Exploration of international expansion opportunities.

Key Dates

Keywords

Bitcoin, Fold App, SPAC, Merger, Cryptocurrency, Financial Technology, Rewards, Personal Finance, Treasury, OTC, NASDAQ