Summary Fold Holdings shares have dropped over 50% in under eight months since my initial 'hold' rating, reflecting ongoing skepticism. Though the company grew revenue year over year, account growth seems slow for a company priced at 5x forward sales. With Fold's basic mNAV already falling under 1.0, there is a growing incentive for the company to sell BTC to raise needed capital. Despite the issues, FLD remains on my watch list as a rare US company pursuing a legitimate Bitcoin-based business model. When I last wrote about Fold Holdings ( FLD ) for Seeking Alpha, I initiated stock coverage with a 'hold' and cited a lack of interest in the rewards business as my primary reason for not buying FLD stock. Furthermore, I went into detail about the company's purported Bitcoin ( BTC-USD ) holdings and found the company's major BTC acquisition to be more 'PR' than substance given that Fold's convert holders were actually in control of a large amount of the BTC that Fold claimed to own. In the time since that article, shares of FLD have fallen by over 50% in a little under 8 months. Given the massive drawdown and the recently reported Q3 earnings, it's time for an updated look at Fold's Bitcoin-based business. Q3-25 Earnings For the quarter ended September 2025, Fold Holdings reported $7.4 million in top-line revenue. While this was down sequentially from $8.2 million in Q2, in Q3 revenue did grow by over 41% year-over-year. Financials Q3-24 Q2-25 Q3-25 YoY QoQ Revenue Net $5.2m $8.2m $7.4m 41.2% -9.5% Total operating expenses $9.4m $14.5m $13.3m 41.7% -8.0% Operating loss -$4.2m -$6.3m -$5.9m 42.5% -6.1% Source: Fold Holdings, 10-Qs Despite a 9.5% sequential decline in top-line revenue, the company was able to reduce expenses by 8% from Q2. This helped Fold reduce its operating loss from $6.3 million in Q2 to $5.9 million last quarter. Still, the company's Q3 loss widened year-over-year. Digging into the specific expense items, compensation and benefits jumps off the page with a 408% year-over-year increase from $734k in Q3-24 to over $3.7 million in Q3-25. I find this level of compensation to be rather large given the company's $7.4 million in revenue during the quarter. Shifting to some of the company's key user metrics, there are both good and bad signs, in my estimation: Quarter Total Accts Verified Accts % Verified QoQ Accts QoQ Verified Q3-24 580 68 11.72% Q4-24 591 71 12.01% 1.90% 4.41% Q1-25 609 76 12.48% 3.05% 7.04% Q2-25 619 80 12.92% 1.64% 5.26% Q3-25 625 82 13.12% 0.97% 2.50% Source: Fold Holdings, Analyst's calculations, accts in 000s First the good; Fold appears to be doing a good job converting some of its non-verified accounts to verified following KYC completion. Last year, 11.7% of Fold's accounts were verified. As of the end of September, over 13% of the company's customers have gone through KYC. This should allow the company to better monetize its customer base. That said, sequential growth of total accounts slowed to just 1% in the quarter. For a growth-stage company, this seems a bit underwhelming to me. Through the first three quarters this year, Fold is burning about $7.3 million per quarter on average. I view this as problematic given the company's liquidity position. Balance Sheet, mNAV, and Valuation On paper, Fold's liquidity position is actually pretty good. While the company only has $6.7 million in cash and equivalents, Fold's Bitcoin stash was worth $170.4 million at the end of the quarter. With total liabilities of just $96.3 million, FLD shareholders have $94.7 million in stockholder equity: Balance Sheet Q3-25 Cash/equivalents $6,663,463 Digital Assets (Treasury) $170,392,495 Total Assets $190,966,112 Total Liabilities $96,276,871 Stockholder's Equity $94,689,241 Source: Fold Holdings, 10-Q Given the 48 million shares outstanding at the end of September, Fold's book value per share comes in at a little under $2 per share at the end of Q3. Of course, this valuation is largely dependent on the company's Bitcoin holdings rather than cash or other tangible assets. Thus, even though the company is working toward a Bitcoin-based business that should be less sensitive to the day to day moves of the token price, the market value of Fold's BTC holdings has the most significance to the share price today. In the company's investor deck , it noted 48.3 million shares outstanding and 1,526 BTC as of November 7th. At intraday market prices on November 12th, FLD shares are trading at a basic mNAV discount of 4%: Units Unit Price Total Value Bitcoin Held 1,526 BTC $101,500 $154,889,000 Shares Outstanding 48,307,642 $3.08 $148,787,537 Basic mNAV 0.96 Source: Fold Holdings, market data from November 12th at 1p eastern Fold is certainly no stranger to shares trading at a discount to basic mNAV as it has happened three different times this year already. But a sustained move lower for FLD shares relative to the performance of BTC would open up the company to what I believe would be a significant capital allocation pickle. As recently as September, FLD shares traded at a basic mNAV rate closer to 0.8. The problem is since Fold is still a cash-burning company, the longer FLD shares trade at a basic mNAV discount, the more difficult it is to argue Fold should be selling shares to fund operations rather than selling BTC at the market rate since it is an unproductive, liquid asset that could be utilized to grow the business. And keep in mind, 800 of Fold's BTC is restricted from usage because it is pledged as convertible note collateral. The fully diluted shares outstanding number is slightly above 73 million shares. When we look at the book value of FLD shares on a fully diluted, real-time BTC value adjustment, the equity is worth about $1.08 per share. Risks In my opinion, FLD shares could conceivably go much lower than current levels even though they're already trading at a basic mNAV discount. The question is whether or not the company will sell BTC to raise funding with its share price trading below basic mNAV. Fold does not believe that it will need to sell Bitcoin to fund operations over the next 12 months, though it does acknowledge in the 10-Q that it may have to: Our Investment Treasury is considered a long-term investment and we do not believe we will need to sell or engage in other transactions with respect to any of our Investment Treasury within the next twelve months to meet our working capital requirements, although we may from time to time sell or engage in other transactions with respect to our Investment Treasury as part of treasury management operations. This is, of course, purely speculation on my part; but I believe Fold's price will continue lower from here. I think the 'DAT' hype in the market is largely over. And even though it probably isn't proper to look at FLD solely through the DAT lens alone, the company still loses money, trades almost 5x forward sales, and operates a business that seemingly could be easily replicated by major Fintech competitors. Closing Summary Having said all this, as one of the few companies in the US equity markets that appears to be attempting something resembling a Bitcoin-based business, my view is that Fold remains a solid watchlist candidate. I certainly didn't like FLD at $7 per share; I don't know that I like it all that much at $3 per share either. Closer to book value, I'm much more inclined to take a shot on Fold. For me, the problem is evident: the company loses a lot of money each quarter relative to the revenue that it generates, and user growth seems far from robust. Given Fold's quarterly burn rate, the company likely has to raise capital next quarter just to keep going. Given the mNAV discount, the market seems to be telling the company to sell Bitcoin to raise capital. Will management oblige?
