Summary KULR Technology is marketing itself as an investment into a number of key megatrends in today's markets like Bitcoin, Generative AI, Energy Storage, Nuclear and Defense Technology. In recent weeks, the company has started to replicate MicroStrategy's business model of selling overvalued shares into the open market and using the proceeds to accumulate Bitcoins. While MicroStrategy is currently valued at approximately 2x its Bitcoin holdings, KULR Technology's multiple is closer to 9x. Even when assigning a very generous valuation to the company's tiny core business, downside could be north of 40%. Given KULR Technology's massive overvaluation and considering the risks associated with the company's Bitcoin accumulation strategy, I am reiterating my "Sell" rating on the shares. Note: I have covered KULR Technology Group, Inc. ( KULR ) or “KULR Technology” previously, so investors should view this as an update to my earlier article on the company. Last month, I initiated coverage of KULR Technology with a " Sell " rating due to the tiny, money-losing company trading at an eye-watering valuation of 30x estimated 2025 revenues. In recent months, management's persistent efforts to position KULR Technology as an investment into several of the biggest hype themes in today's market (Space, AI, Defense, Energy Storage, Nuclear, Bitcoin) have attracted hosts of speculative investors and momentum traders. While the company has continued to celebrate its alleged progress in a series of press releases , the recent decision to effectively replicate MicroStrategy's ( MSTR ) business model of financing large-scale Bitcoin purchases by raising additional equity might soon result in the stock price becoming more closely correlated to movements in the world's leading cryptocurrency. KULR Technology also adopted "BTC Yield" as a key performance indicator: KULR has introduced “BTC Yield” as a key performance indicator ("KPI") for its Bitcoin Treasury strategy. This metric evaluates the Company’s ability to increase its bitcoin holdings per share, offering investors a transparent measure of the per share accretive impact of its bitcoin acquisitions. BTC Yield is calculated as the percentage change period-to-period in the ratio of the Company’s bitcoin holdings to its Assumed Fully Diluted Shares Outstanding. This KPI helps assess the effectiveness of KULR’s bitcoin acquisition strategy in driving shareholder value. As of last week, the company had utilized $50 million in cash to acquire 510 bitcoins with a current market value of $52.6 million. KULR last updated on its share count in a SEC-filing on January 17. At that time, total outstanding common shares had increased to 273.6 million, up by almost 30% over the past six weeks alone. On January 24, the company increased its existing At the Market Offering Agreement ("ATM Agreement"), with Craig-Hallum Capital Group LLC by another $50 million and with 500 million authorized shares, further increases to the ATM Agreement seem to be likely. So far, KULR Technology has increased the original $20 million ATM Agreement three times: Regulatory Filings Until last week, the company had raised $96 million in gross proceeds under the ATM Agreement, of which $50 million had been invested in Bitcoin. Adjusted for commissions and assumed cash burn from operations, I would expect the company's current cash position to be at least $35 million. Using the last disclosed share count, KULR Technology's enterprise value calculates to approximately $468 million, or 26x the company's estimated 2025 revenue. Regulatory Filings / Author's Estimates Perhaps more important, KULR Technology is trading at 9x the market value of its Bitcoin holdings and 5.3x the combined value of its cash and Bitcoin holdings. In comparison, MicroStrategy is currently changing hands at slightly below 2.0x the market value of its Bitcoin holdings, which apparently isn't exactly cheap either. However, the world's largest corporate Bitcoin holder looks like a real bargain when compared to tiny KULR Technology. Quite frankly, rather than buying shares of overvalued Bitcoin players like MicroStrategy and particularly KULR Technology, investors with a bullish view of the cryptocurrency should rather consider an investment in ETFs from the likes of IBIT , FBTC , ARKB or HODL which trade close to their net asset value. In addition, with KULR Technology trading at a massive premium to net asset value, there's a huge incentive for the company to facilitate further Bitcoin purchases by selling large amounts of newly-issued shares into the open market. Even assigning a valuation of 10x estimated 2025 revenues for the company's tiny core business and using MicroStrategy's valuation of 2x its Bitcoin holdings would only result in a price target of $1.17: Author's Calculations / Regulatory Filings Given KULR Technology's massive overvaluation and considering the risks associated with the company's Bitcoin accumulation strategy, I am reiterating my " Sell " rating on the company's shares. Even under generous valuation assumptions, current downside potential is exceeding 40%. Bottom Line Given KULR Technology's eye-watering valuation, I can't blame management for its efforts to replicate MicroStrategy's business model of selling expensive common shares into the open market and invest the proceeds into additional Bitcoins. However, investors looking for exposure to the world's leading cryptocurrency should rather consider investing in Bitcoin ETFs which tend to trade around net asset value rather than buying overvalued shares of companies like MicroStrategy and particularly KULR Technology. Even when using very generous valuation assumptions, there's still plenty of downside in KULR Technology's common shares. Consequently, I am reiterating my " Sell " rating on the company's shares.
