Solana Company (HSDT) Stock Drops 60% Amid Early PIPE Share Unlock
Executive Summary
Solana Company (HSDT), a digital asset treasury firm supported by Pantera Capital, has initiated the early unlocking of shares for participants in its $500 million private investment in public equity (PIPE) round. This decision has been accompanied by a significant 60% decline in HSDT's stock price, which now trades below the PIPE issuance level. The company's executive chairman, Joseph Chee, stated the move was a "deliberate choice" to foster a foundation of long-term shareholders, despite acknowledging potential near-term market pressure. This event highlights growing scrutiny of PIPE funding models within the digital asset sector, particularly as other crypto treasury firms have experienced similar stock price depreciations post-unlock.
The Event in Detail
HSDT, formerly known as Helius Medical Technologies, announced the accelerated registration for resale of shares stemming from its recent PIPE deal. The company's stock price experienced a steep decline, plunging approximately 20.8% on a single trading day, and a cumulative 60% drop in recent days. This movement pushed the stock below its PIPE pricing level of $6.881, trading around $6.50, with pre-market prices reported at $6.36. Joseph Chee, HSDT's Executive Chairman, communicated to shareholders that this was a strategic decision to "shake out weak hands" and achieve "market equilibrium," distinguishing HSDT's proactive approach from competitors who have delayed similar share registrations. He noted that if shares trade below net asset value, investors could effectively acquire Solana (SOL) cryptocurrency at a discount.
Financial Mechanics and Market Impact
The core financial mechanism at play is the Private Investment in Public Equity (PIPE) model. In this structure, private investors acquire newly issued shares, often at a discount to the prevailing market price, providing companies with immediate capital. However, analytics platform CryptoQuant has warned that the subsequent unlock and resale of these shares creates an "overhang," leading to significant selling pressure and dilution for existing shareholders. This dynamic frequently causes stock prices to "gravitate toward their PIPE issuance levels."
Precedents in the crypto treasury sector underscore this risk. Kindly MD (NAKA), a medical firm that pivoted to a Bitcoin treasury model, saw its stock surge from approximately $1.80 to nearly $35 following its PIPE announcement. However, upon the unlock of PIPE shares, the stock plummeted 97% to $1.16, closely aligning with its $1.12 PIPE price. Similarly, Strive Inc. (ASST), with a PIPE priced at $1.35, dropped 78% from its peak, and Cantor Equity Partners (CEP), which executed a PIPE at $10, saw its stock fall nearly 70%. CryptoQuant predicts potential further declines of 50-55% for some of these firms as more PIPE shares become liquid. The market capitalization of HSDT stands at $257.92 million, with a daily trading volume of $219.98 thousand shares, reflecting the current volatility.
Business Strategy and Precedents
HSDT's stated business strategy is to operate as a digital asset treasury focused on acquiring Solana (SOL), aiming to maximize SOL per share by leveraging capital market opportunities and on-chain activities. The company emphasizes its ability to generate institutional-grade staking yields, targeting over 7%, which are typically inaccessible to retail investors. HSDT envisions building "the Berkshire Hathaway of the Solana ecosystem," providing public market investors with exposure to Solana's long-term growth.
This strategy draws parallels to companies like MicroStrategy, which has famously accumulated Bitcoin as a treasury asset. However, the use of PIPE deals for crypto treasuries introduces a specific set of risks, as demonstrated by Kindly MD and Strive Inc. HSDT's decision to proceed with the share unlock, in contrast to competitors postponing such actions, was framed as a commitment to transparency and securing long-term, dedicated shareholders.
Broader Context: Web3 Funding Landscape
The challenges faced by HSDT and other PIPE-backed crypto treasury firms occur within a complex and evolving Web3 funding landscape. While Solana's broader ecosystem has seen significant institutional validation in 2025, including Franklin Templeton's $594 million fund migration and Pantera Capital's $1.25 billion Solana-focused treasury initiative, the specific mechanics of PIPE deals are proving contentious for public companies.
The emergence of institutional treasuries actively staking SOL for 7-8% annual returns, along with the rising prospect of SOL ETF approvals, indicates a maturing market for Solana as a strategic asset. However, the "PIPE price gravity" effect, where stocks regress to their issuance price, poses a direct threat to investor confidence in certain crypto-related public entities. CryptoQuant concludes that only a strong and sustained Bitcoin rally, which could uplift the broader digital asset market, is likely to counteract the downward pressure confronting these treasury stocks. Without such a rebound, many companies utilizing the PIPE model risk trending towards or below their initial PIPE issuance levels, potentially leading to a re-evaluation of this fundraising mechanism across the Web3 sector in favor of more stable or traditional capital-raising strategies.
Edgen Crypto·Oct 20 2025, 17:29
