Summary Sequans Communications is now rated Hold as dilution risk overshadows the value of its Bitcoin treasury and core IoT business. SQNS holds 3,200 BTC, but the fully diluted share count drops the Bitcoin floor value per share below current trading levels. The IoT chip business shows promise with Cat-1bis and RedCap, but revenue and margin volatility persist, requiring execution and scale. Ongoing equity issuance to fund Bitcoin accumulation creates uncertainty; clear dilution caps and capital allocation transparency are needed for a more constructive view. The day my first Buy position on Sequans Communications S.A. (NYSE: SQNS ) was published back in July, the stock was ~$5.3 a share. After the American Depositary Share (ADS) ratio change earlier this month, that entry got restated to $53.10, and at today’s ~$9.20, the position shows an 82% drop. Clearly, the stock has really collapsed since management rolled out its Bitcoin treasury strategy and launched a big financing package. The company now holds about 3,200 BTC, worth roughly $374 million at cost. On a basic ADS count of 25.5 million, that works out to around $14–15 of Bitcoin per ADS, which makes today’s price look cheap. But that picture changes once you factor in dilution. Between the $384 million in convertibles and the $200 million ATM program announced in August , the fully diluted ADS count could easily rise to ~57.5 million. On that basis, the Bitcoin floor drops to just $6.50 per share, which is well below where the stock trades now. That’s why I’m shifting to Hold. Sequans has real optionality: if Bitcoin rallies and if the IoT chip business executes on Cat-1bis and RedCap, the upside could be meaningful. But the dilution risk is too large to ignore, and the market is treating this as a hybrid semiconductor/Bitcoin proxy that doesn’t yet deserve a clean multiple on either side. The Core IoT Business: Searching For Scale, Fighting For Time Sequans is still a chip company at heart, and Q2 2025 showed us that the core needs to work and prove why some bullishness is warranted. Total revenue was $8.1 million, down 15.8% year over year, with a net loss of $9.1 million and an operating loss of $8.7 million. Gross margin landed at 64.4%, well below last year’s 84% as mix shifted and cost pressure crept in. Sequans Q2 2025 Earnings Report On the mix side, we can see a cleaner story than the headline. Product revenue improved to $3.9 million (+10% QoQ, +59% YoY) , but license & services slipped to $4.3 million (down 40% YoY) and did the major damage. That pattern says hardware sell-through is stabilizing while the higher-margin licensing stream remains volatile. If I’m looking ahead, I want to see product strength persist and licensing normalize; otherwise, margin recovery will lag. Cash before the July financing sat around ~$40 million, which isn’t much cushion for a business still in investment mode. Management is guiding to breakeven operating income by 2026, so that puts a clock on execution, especially if they really plan to “leverage the value generated by this business to support further investment in our Bitcoin treasury.” What we have here is a case of financing that funded the Bitcoin strategy and bought time, and now, the IoT business has to earn it. In my view, the most important question is: where does durable growth come from? Two lanes: Cat-1bis as the bridge product. For one, it fits cost-sensitive devices that need reliable connectivity without 5G throughput, and it’s already getting big design wins in logistics, utilities, and asset tracking. If Sequans can put together more multi-year supply agreements coupled with real royalty and licensing payments coming in by the end of the year, then hardware revenue becomes a steadier base and gives the company operating leverage. 5G RedCap as the step-change. RedCap sits between LTE-M/NB-IoT and full 5G, and the target is medium-bandwidth devices with lower radio complexity and better battery life. I think the timing matters, especially going into next year. If RedCap ramps up in 2026–2027, then Sequans can push its LTE customer base forward without losing them to bigger rivals. On the other hand, it is very likely that any slips will allow larger vendors to move in and gobble up the market that the company is already banking on for growth. What would make me more constructive on the core ahead of 2026: Design-win disclosure with dollar math. We’ve seen references to multi-year pipelines in commentary, and those are great. However, I want booked value and conversion rates, not just logos. Right now, the picture looks really positive: management says that “6 design wins represent in total close to $30 million of 3 years' revenue.” At the same time, they have a “$60 million 5G Taurus license with a Chinese partner,” and we should see production online by the end of 2025. That means that royalty revenues should improve drastically in FY2026, and that is crucial to the forward momentum and narrative. Gross-margin roadmap back toward the 70s: We need to see proof that the overall product mix and licensing recover. One good quarter won’t cut it, unfortunately. Opex discipline that reduces the loss line while R&D focuses on more Cat-1bis variants and RedCap tape-outs. Working capital control that keeps cash burn predictable without leaning on the ATM to plug gaps. Here’s my bottom line for the IoT side: the technology lines up with where connected devices are going, but scale is the missing piece. We really need to see movement on the volumes side, and Q2 was a mixed bag. I believe that if Cat-1bis can anchor the base and RedCap arrives on time, the core business can still compound. If not, the equity story is going to be perennially tethered to the Bitcoin treasury and the dilution math that comes with it. That’s what I want to discuss next. The Bitcoin Treasury Strategy Is Key Now: The Math, The Path, And What It Means For Value Let me first give you a recap of what I discussed regarding this in my prior article on Sequans . In July, the company closed a $384 million financing to fund a Bitcoin treasury, split between a $195 million equity PIPE and $189 million in secured convertible debentures. They said all net proceeds would be used to buy Bitcoin and to support the mechanics around that program. A few days later, they started buying. As of writing this article, on September 26, 2025, Sequans holds around 3,205 BTC, with a stated net investment of about $374 million and an average acquisition price of ~$116,653 per BTC. Earlier, I didn’t think that the Bitcoin strategy was majorly material to the company’s business potential and future, but now that they’ve also set a long-term target to acquire 100,000 BTC by 2030, it changes the valuation picture pretty dramatically. Oh, and I must mention that the 100k BTC target is an incredibly ambitious goal by any standard. Since the July BTC purchases, Sequans has added an ATM equity program in August. The goal is for the company to sell shares into the market from time to time, and the net proceeds will be used primarily to fund more Bitcoin purchases under the treasury plan. In other words, equity issuance is now a standing tool to grow BTC holdings. Fortunately, it looks like we’ll get transparency via new disclosures regarding the BTC strategy, and that’s good. Starting with Q3 2025, they’ll present Bitcoin KPIs alongside financials, and the company has set up a Bitcoin dashboard on its website . That matters because the market needs a clean way to track holdings, cost basis, and any leverage tied to this program. Why This Is Moving The Stock So Much I believe that, given recent developments, the market now values Sequans as a hybrid: part IoT chipmaker, part Bitcoin holding vehicle. That carries two levers on the equity: the mark-to-market on BTC, and the share count as they issue stock or convert securities to fund more BTC. As I mentioned earlier, the July raise included secured convertible debentures due in 2028. One of the SEC filings cites a conversion price of $2.10 per ADS at issuance , plus common warrants issued with both the equity and debt tranches. However, subsequent ADS ratio changes will adjust those conversion mechanics, but the point is simple: full conversion plus ATM usage will materially lift the share count over time. Now, let us tie it back to today’s value. BTC on a basic share count: With ~25.5M diluted ADS outstanding in Q2, the BTC alone works out to about $14–15 per share at the company’s reported net investment value. That makes the current price (~$9.2) look cheap on first pass. BTC on a fully diluted view: If I layer in a high-level dilution sketch from convertibles and the $200M ATM (for example, selling $200M at ~$10 implies ~20M new ADS on its own), a ~57.5M fully diluted ADS count is not hard to imagine. On that basis, the BTC floor drops to roughly $6.50 per ADS. To be clear, I’m not treating these as precise forecasts. I use them to frame risk. The difference between $14–15 (basic) and ~$6.50 (fully diluted) is the entire thesis in one picture: BTC can look like a floor on a static share count, but funding the plan lifts the denominator. Sensitivity That Actually Matters To make this useful, I’ve simplified it into two questions. a) What does BTC have to do for equity to work on a diluted basis? If BTC rallies +50% from the company’s average cost, the holdings value jumps from ~$374M to ~$561M. On a 57.5M share sketch, that is ~$9.75 per ADS from BTC alone. Add a modest $100M for the IoT business, and you get ~$11.50. That is some upside, but it is not explosive if dilution keeps rising. B) How aggressive does issuance need to be to hit 100,000 BTC by 2030? Right now, Sequans is at 3,205 BTC. Getting to 100,000 BTC means that it will add ~96,800 BTC over five years. Even if BTC averages $100k over that path, that is ~$9.7B of cost, and the company says it will use ATM proceeds and other funding sources to keep accumulating. I read that as a long runway plan that depends on market windows, not a straight line, and obviously, the financing footprint will have to grow exponentially to get anywhere near that number. I think the market knows this, which is why the ATM has become a lightning rod. Structure And Guardrails I Want To See Next Clear caps on annual dilution tied to the ATM. If they set targets or guardrails, I can model the denominator with more confidence. Custody and risk: They’ve referenced partnering with Swan Bitcoin on treasury management. We need to see more details on custody, security, and any rehypothecation limits, given the size of this program relative to the core business. Capital allocation split: Finally, a simple playbook that shows what portion of operating cash flow, if any, is reserved for R&D vs. BTC purchases as the IoT side moves toward the 2026 breakeven target. How I Square It With A Hold The BTC stack gives Sequans optionality and attention it never had. On a static share count, it creates the impression of a value floor. But growing your BTC holdings means running through equity issuance and convertible instruments, and those push the floor down unless BTC outruns dilution. I like that the ATM language is explicit that proceeds will be used to keep buying Bitcoin, which ties future share supply directly to the treasury strategy. However, that trade-off is the core reason I’m at Hold right now.
