Shares of Semler Scientific(NASDAQ: SMLR) soared on Tuesday. The medical device maker's stock peaked at a 43.1% single-day gain at 2:15 p.m. ET, boosted by a new cash-management strategy. More to the point, Semler's new treasury plan is all about Bitcoin(CRYPTO: BTC) instead of cash.
Why Semler Scientific chose Bitcoin over cash
In an early-morning press release, Semler said it looked over various treasury strategies and settled on a heavy investment in Bitcoin. With $62.8 million of cash reserves at the end of March, the company has bought 581 bitcoins for a total of $40 million. That's an average price point of approximately $68,850 per Bitcoin, roughly in line with current market prices.
Management explained that Bitcoin looks like "a reliable store of value and a compelling investment." They like the cryptocurrency's built-in scarcity, making it a safe bet amid global-inflation trends. Chairman Eric Semler also gave Bitcoin a favorable comparison to physical gold, whose global market value is about 10 times Bitcoin's.
"Given the gap in value between gold and bitcoin, we believe that bitcoin has the potential to generate outsize returns as it gains increasing acceptance as digital gold," Semler said.
He also underscored Bitcoin's growing stature in institutional investing, boosted by the recent approval of spot Bitcoin exchange-traded funds (ETFs).
Juggling crypto investments and the medical device business
Elsewhere in the announcement, Semler's leaders reminded investors that the company is all about fighting chronic diseases. Its flagship product, the QuantaFlo blood flow testing device, may soon expand its medical clearance to include diagnosing cardiovascular diseases. The Bitcoin idea doesn't make Semler a cryptocurrency investment -- it's only an effort to protect and maybe grow Semler's cash reserves in the long run.
But investors see an echo of enterprise software maker MicroStrategy(NASDAQ: MSTR) here. The software business is still active but largely ignored by market makers, effectively making MicroStrategy a direct play on Bitcoin's future. Semler is heading down the same uncharted path.
Only a handful of companies own more Bitcoin than Semler Scientific, especially if you exclude crypto specialists such as Bitcoin mining experts. And Semler is a microcap stock with a market value of just $213 million today -- after the Bitcoin-based jump.
In other words, Semler Scientific just became a crypto stock despite management's assurance that the main business remains 100% medical. This stock will probably rise and fall alongside Bitcoin's price moves from this point on, for better or worse.
Should you invest $1,000 in Semler Scientific right now?
Before you buy stock in Semler Scientific, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Semler Scientific wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,342!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of May 28, 2024
Anders Bylund has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Semler Scientific. The Motley Fool has a disclosure policy.
