Fold Holdings announced Wednesday it eliminated all secured debt by selling approximately $45 million in Bitcoin. The Phoenix-based fintech used $20 million to retire Bitcoin-collateralized obligations and redirected $25 million to growth. CEO Will Reeves said the move reduces financing risk and protects roadmap execution from market volatility. Fold operates Bitcoin rewards credit cards and related financial products.
Fold Holdings Sells $45 Million in Bitcoin to Eliminate Debt
The Nasdaq-listed firm liquidated roughly $45 million worth of Bitcoin at an average price of about $71,000 per coin. Fold used $20 million of those proceeds to retire Bitcoin-collateralized debt and redirected the remaining $25 million toward growth initiatives. The restructuring leaves Fold debt-free on its secured obligations.
"This decision reflects our conviction in Fold," CEO Will Reeves said in a statement. "We have reduced financing risk, strengthened our balance sheet, and ensured that short-term market volatility cannot stand in the way of executing our roadmap."
"As we approach several product launches," he added, "we believe Fold is entering one of the most important growth periods in the company's history."
Share Price Jumps 162% Following Announcement
Investors responded positively to the announcement. Shares in FLD jumped as high as $1.60 after the opening bell—a 162% spike over Tuesday's closing price. At the time of reporting, shares were trading at $1.10, still a more than 80% increase on the day.
FLD shares have fallen about 58% since the start of the year and over 78% over the last 12 months.
Debt Elimination Removes Monthly Interest Payments
The debt elimination immediately removes monthly cash interest payments. Fold said this should improve its cash flow profile throughout the year as new products come online.
Fold's first-quarter revenue came in at $5.6 million, a 21% decline from a year earlier, according to the company's most recent earnings report.
Fold Expands Bitcoin Rewards Credit Card and Product Portfolio
Recent Fold launches include a Bitcoin rewards credit card, a Bitcoin gift card product, and a business-focused offering that includes its "Bitcoin Bonus" service to enable employers to pay out crypto bonuses to employees.
Reeves said management views the Fold Bitcoin Credit Card as one of the most significant long-term growth opportunities within its ecosystem. The cleaner balance sheet positions the company to expand its cardholder base and pursue additional lending partnerships.
FAQ
What did Fold Holdings do with the $45 million from its Bitcoin sale?
Fold Holdings used $20 million of the $45 million Bitcoin sale proceeds to retire all Bitcoin-collateralized debt. The company redirected the remaining $25 million toward growth initiatives.
Why did Fold Holdings' share price jump 162% on Wednesday?
Fold Holdings' share price jumped 162% after the opening bell Wednesday following the company's announcement that it eliminated all secured debt and freed up $25 million in capital by selling Bitcoin holdings. Shares reached as high as $1.60 during the session.
How does eliminating debt affect Fold Holdings' cash flow?
The debt elimination immediately removes monthly cash interest payments. Fold stated this should improve its cash flow profile throughout the year as new products come online.
