Stock price plunges 12% after the merger: The pros and cons of the Strive-Semler merger

Market excitement surged following the announcement of a reverse stock split by Strive(ASST) and Semler Scientific(SMLR). The stock prices plummeted immediately after the filings, with Strive’s stock dropping to $0.90 before closing down 12%. Semler Scientific’s stock also fell nearly 10%, clearly reflecting investor confusion.

Contradictory Merger Signals and Growing Investor Concerns

The reason why both companies’ stock prices fell over 10% immediately after shareholders approved Semler Scientific’s acquisition is that the 1-for-20 reverse split was unexpected. CEO and Board Chairman Matt Cole defended the move, stating it was “meaningless in terms of stock valuation,” but the market interpreted it differently. The stock consolidation aimed to meet institutional investor criteria, but instead led to a decline in trust.

Originally, Strive intended this reverse split to open the door for institutional investors. Over the past three months, most of Strive’s stock traded below $1, necessitating a move to meet institutional entry standards. However, the sharp decline in stock price immediately after the announcement served as a clear negative signal.

Holding 12,798 Bitcoins, Surpassing Tesla in Asset Scale

The core of this all-stock transaction is Bitcoin. With Semler transferring 5,048 BTC to Strive’s balance sheet, the merged company will hold a total of 12,798 Bitcoins. This surpasses Tesla(TSLA) and Trump Media & Technology Group(DJT), ranking 11th among corporate holders.

This includes 123 BTC (approximately $113 million) recently purchased by Strive at an average price of $91,561. This demonstrates that Strive has been continuously accumulating Bitcoin even before the merger. The Bitcoin-centric asset composition appears to be the biggest attraction of this merger.

Monetization of Thaller Medical Business and $120 Million Debt Resolution

Strive’s strategy is clear: monetize Semler’s medical diagnostics business and repay approximately $120 million of outstanding debt. This includes $100 million in convertible bonds and a $20 million loan from Coinbase(COIN).

The company plans to focus on Bitcoin operations and revenue generation while maintaining a streamlined corporate structure. CIO Ben Workman explained that the reverse split was “to align the stock price with institutional participation standards,” but market reactions were mixed.

Pressure for Integration in Digital Asset Financial Sector

This merger is part of a broader industry trend. In recent months, declining stock prices have led to a sharp drop in investor interest, increasing pressure for consolidation in the digital asset finance sector. Many companies are trading at prices far below their crypto holdings’ net asset value, limiting their ability to raise capital.

Mergers and asset roll-ups have emerged as nearly the only means to expand operational scale and gain market visibility. The volatility in stock prices following the reverse split exemplifies how serious the structural challenges are in this sector.