Fitell, an Australian fitness equipment firm listed on Nasdaq, saw its stock drop 21% on Wednesday after announcing it invested $10 million in Solana (SOL).
The company announced that as part of its new strategic shift to embrace digital assets, it had purchased more than 46,000 SOL.
However, Fitell finished the regular session on Wednesday at $6.65, an increase of 0.15%, before closing the after-hours session about a penny higher at $6.66, per Google Finance data.
The sudden hit shows investors are worried about the company’s sudden move from being a fitness company to a digital asset manager.
Fitell’s Strategic Pivot to Crypto Treasury Management
Fitell has made the $10 million purchase of Solana as part of a broader reimagining of the company, which, just a day earlier, announced its intentions to issue a $100 million convertible note to grow its digital asset treasury.
Per the company, it will devote 70% of net proceeds from such fundraising to the acquisition of cryptocurrencies, while the other 30% will go toward on-chain activity, cryptocurrency operations, and working capital.
Fitell CEO Sam Lu underscored the desire to increase its SOL holdings and stake revenue through the acquisitions, while also creating “long-term shareholder value.”
To further bolster its approach, Fitell enlisted David Swaney and Cailen Sullivan to act as advisers who will work to formulate strategies to yield digital asset acquisitions, while also assessing risk relative to decentralized finance (DeFi).
Solana Treasuries Rapidly Expanding Across Industries
Fitell’s action comes at a time when we are seeing an increasing number of companies creating Solana digital asset treasuries (DATs).
Among the newest participants is Brera Holdings, now the proudly named Solmate, which recently raised $300 million to build infrastructure on the Solana blockchain.
Likewise, Helius Medical Technologies recently announced its intention to raise up to $1.25 billion for its Solana DAT, after closing on a private placement of $500 million.
On September 8th, Nasdaq-listed Forward Industries experienced a greater than 10% rise in its shares after raising $1.65 billion to develop a Solana treasury, with investors lauding the capital infusion and firm partnerships, according to UnoCrypto.
The Strategic SOL Reserve reports 17 different entities now hold around 17.04 million SOL, which represents about 2.96% of Solana’s total supply locked in treasuries.
This all speaks to institutional interest in Solana growing despite continued equity market volatility for companies pursuing this strategy.
Also Read: NASDAQ Listed BTCS’s Crypto Holdings Surge 88% Following $8.42M Ethereum Purchase; Shares Up 13%
Mixed Reactions Across Nasdaq as Companies Adopt Crypto Treasuries
The market response to corporate crypto treasuries has been inconsistent.
Earlier this week, medical device manufacturer Helius Medical Technologies plummeted nearly 34% after disclosing its $175M purchase of Solana.
Similar to Helius, BNB-focused CEA Industries, Ethereum treasury firm BitMine Immersion Technologies, and Bitcoin behemoth Strategy Inc. saw declines of 19.5%, 10%, and 2.5% respectively, related to their own crypto announcements.
Conversely, GD Culture suffered a whopping 28% share price drop on September 17th after announcing an $875 million Bitcoin acquisition as part of a share-for-assets agreement, with share dilution and risk overcoming investor optimism, UnoCrypto reported.
Fitell is down 21%, moving this company closer to that ultimate group. This shows that investors may reward well-structured acquisitions, but a sudden pivot to digital assets without fidelity to prior strategy can also lead to questioning and selling off of stock.
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