Parent company will invest up to half of its excess cash in the “highly volatile” cryptocurrency to pave the way for enabling bitcoin payments for agents and customers at a later date .
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Flat-fee commission brokerage and real estate services platform Fathom Holdings is jumping on the bitcoin bandwagon, saying it will invest up to half of its excess cash in the cryptocurrency to pave the way for enabling bitcoin payments for agents and customers at a later date.
Fathom said it plans to purchase up to $500,000 in bitcoin or bitcoin exchange-traded funds (ETFs) over the next two weeks, rather than investing that money in more traditional interest-bearing investments like certificates of deposit or U.S. government bonds.
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Joanne Zach
“The integration of bitcoin into commercial and financial strategies has accelerated across financial markets, positioning it as both a hedge against inflation and a safeguard against economic and currency risks in the global economy, Fathom Chief Financial Officer Joanne Zach said, in a statement. “Our bitcoin strategy diversifies our treasury holdings, and we believe positions Fathom at the forefront of digital currency transactions in the real estate industry.”
In its Jan. 23 business update, Fathom acknowledged the risk of investing in bitcoin and said it also plans to raise up to $10 million through a shelf registration statement that allows it to sell shares of common stock as needed.
Bitcoin is “a highly volatile asset” that “does not pay interest or dividends,” and the company’s bitcoin strategy has not been tested, Fathom warned investors.
“Although we believe bitcoin, due to its limited supply, has the potential to serve as a hedge against inflation in the long term, the short-term price of bitcoin declined in recent periods during which the inflation rate increased,” Fathom executives said in a regulatory filing. “Some investors and other market participants may disagree with our bitcoin acquisition strategy or actions we undertake to implement it.”
If bitcoin prices were to fall, or Fathom’s bitcoin strategy “otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our common stock would be materially adversely impacted.”
The shelf registration statement also has the potential to dilute the value of existing investors’ shares. Fathom’s share price, which hit a 52-week high of $3.37 on Sept. 17, 2024, touched an all-time low of $1.23 after the Jan. 23 shelf registration and bitcoin announcement.
Fathom had 22.62 million shares outstanding as of Sept. 30, and a market capitalization of $28.3 million at Thursday’s closing price of $1.25.
After raising $31.3 million in a 2020 initial public offering, Cary, North Carolina-based Fathom Holding went on an acquisition spree to broaden the scope of its business. Fathom generates more than 90 percent of its revenue through its real estate brokerage business, Fathom Realty, but is also a provider of mortgages, title insurance and technology for agents.
Fathom issued $5 million in convertible notes in September to accelerate its growth plans and, in November, announced Fathom Realty’s acquisition of My Home Group, the third-biggest real estate brokerage in Arizona with 2,200 agents.
The integration of My Home Group into the Fathom platform is progressing as planned, the company said, and should contribute more than $110 million in revenue this year.
Fathom also provided an update on some key business metrics in advance of its fourth quarter 2024 earnings report.
Fathom Realty’s agent count grew by 23 percent in 2024, to approximately 14,500 as of December 31, with Q4 transaction count up 16.5 percent from the same quarter a year ago.
While Q4 2024 is expected to come in between 7 percent and 10 percent higher than Q3, Fathom projects it will post a $7.3 million Q4 net loss, down from $8.4 million a year ago.
On Thursday, Fathom announced that it hopes to boost its agents’ visibility and provide them with advanced local marketing tools through a partnership with Locafy, an Australian-based company specializing in “entity-based” search engine optimization (SEO).
Email Matt Carter