SQNS

Sequans ($SQNS) Bitcoin Strategy Fails: 270% July Surge Followed by 90% Crash—Analyst Target $20 vs. Current $5, February Earnings to Determine 'Survival'

01/20/2026 19:23

Sequans Communications ($SQNS) attempted a dramatic transformation from failing IoT semiconductor company to Bitcoin treasury operation, but execution has been deeply problematic. In July 2025, the company raised $384 million to fund Bitcoin purchases, and the stock surged 270% from $14.30 on July 10 to $53.90 on July 14. However, the stock subsequently crashed over 90%, currently trading around $5.10—near its 52-week low of $4.44 and down 82% year-over-year. Sequans is a Paris-based fabless semiconductor company founded in 2003, specializing in 4G/5G cellular IoT solutions for smart metering, industrial automation, smart cities, and e-health applications. With 155 employees, the company provides LTE-M/NB-IoT, 4G LTE Cat 1bis, and 5G NR RedCap platforms. However, as the core business rapidly deteriorated, management made the adventurous choice to pivot toward a Bitcoin treasury strategy. The immediate question investors must answer is this: Is Sequans a failed semiconductor company or an undervalued asset with Bitcoin-driven turnaround potential? Analysts maintain Buy ratings with an average price target of $20 (280% upside), but actual financial conditions are deteriorating severely. The collapse of the core semiconductor business is most alarming. Q3 2025 revenue plunged 57.5% year-over-year to $4.3 million, with a net loss of $6.7 million (-$0.79 per share). Q2 also posted revenue of $8.1 million (down 15.8% YoY) with a $9.1 million net loss. Revenue is halving quarter-over-quarter, suggesting fundamental business model failure before the Bitcoin strategy even began. Operating margin stands at -105.21% and profit margin at -81.82%, indicating losses exceed revenue. The cash situation is reaching crisis levels. Cash declined from $62.1 million in December 2024 to $41.6 million in June 2025, and most recently to $13.43 million. At a quarterly burn rate of approximately $20 million, the company can only survive until mid-2026 without additional funding. Sequans' Bitcoin strategy appears modeled after MicroStrategy. On July 7, 2025, the company completed a $384 million raise and initially acquired 3,072 BTC, expanding to 3,234 BTC by October. Management announced plans to acquire 100,000 BTC by 2030. However, in November, the company sold 970 BTC ($100 million) to pay down debt, redeeming 50% of convertible notes. Having to sell Bitcoin immediately after purchase reveals the strategy's fundamental problem. Investors should monitor specific metrics. First, whether Q4 revenue (to be reported February 10) shows sequential growth. If revenue doesn't recover to at least $6 million from Q3's $4.3 million, business recovery prospects are minimal. Second, operating cash flow must improve. If the quarterly $20 million cash burn continues, additional funding will be unavoidable by mid-2026. Third, examine management's concrete plan to achieve 2026 operating income breakeven. Current trends suggest this target is unattainable. The investment thesis breaks if Q4 revenue falls below $4 million, cash drops below $10 million without funding announcements, or the stock breaches $4 (risking NYSE delisting given prior non-compliance warnings in June 2025 and May 2024). The company has been desperate with capital structure moves. On January 15, 2026, a $195 million private placement restored NYSE listing compliance. A February 19 shareholder vote will address capital reduction following ADS buybacks. The company completed its ADS repurchase program and approved buying up to 10% of outstanding shares. These actions resemble financial engineering for survival rather than strategic transformation. Despite this, analysts remain optimistic. Lake Street initiated coverage December 10 with a Buy rating and $18 target. B. Riley Securities maintained Buy with a $13 target on October 16. Roth Capital lowered its target from $75 to $35 in November but still implies 6x upside. This extreme disconnect suggests either analysts see hidden value the market missed, or they're behind the rapidly changing fundamentals. A positive scenario would unfold like this: The September 2024 strategic transaction selling 4G IoT technology to Qualcomm for $200 million generated 2024 net income of $57 million ($2.01 per share). The January 2025 acquisition of Zurich-based ACP accelerates 5G eRedCap chip development, while the Iris next-generation RF integrated transceiver launched successfully. MultiTech selected Sequans technology for next-generation embedded modem platforms in January 2026. The three-year revenue design win pipeline expanded to $300 million. If the IoT business returns to growth starting Q4 2025 and Bitcoin holdings appreciate while the financial structure improves, the current price could be severely undervalued. The most likely base scenario: Sequans continues cash burn and business deterioration through H1 2026, requiring another equity issuance or asset sale. The stock ranges between $4-8 with extreme volatility tied to Bitcoin prices. Management's 2026 operating income breakeven target will likely be missed and pushed to 2027. Some traders may profit from short-term spikes, but most will suffer losses from dilution and volatility. A risk scenario cannot be dismissed. If Q4 results disappoint further, Bitcoin prices crash, and additional funding fails, the company may face bankruptcy or fire-sale by H2 2026. Major institutional holder BPIFRANCE sold 74% of its position (896,282 shares worth approximately $1.3 million) in Q2 2025—an ominous signal. Insider ownership stands at only 0.22%, suggesting management incentives may not align with shareholders. Triggers for scenario shifts are clear. Positive catalysts include Q4 revenue growing 50%+ sequentially, major customer supply contract announcements, or Bitcoin surpassing $150,000 to boost holdings value. Negative catalysts include Q4 revenue below $4 million, funding failure by Q2 end, or major customer defection announcements. Short-term outlook (1-6 months): The stock will likely trade in a $4-7 range ahead of February 10 Q4 earnings and February 19 shareholder meeting. If results beat consensus (-$0.25 EPS) and management presents concrete turnaround plans, the stock could rebound to $8-10. If results disappoint and additional funding is announced, downside risk exists to $3-4. Bitcoin price volatility is also a major variable—BTC above $100,000 is positive for the stock, but below $70,000 creates pressure from declining asset values. Long-term outlook (6+ months) is more uncertain. If the company successfully rebuilds the IoT business and the Bitcoin strategy creates shareholder value, the stock could gradually recover starting H2 2026. For analyst targets of $18-20 to materialize, at least 3-4 consecutive quarters of revenue growth and operating loss reduction are required. However, if current trends continue, the company faces structural decline with limited long-term investment value. The 5-year cumulative return of -97.22% speaks volumes. In conclusion, Sequans Communications is an extremely speculative case of a failed IoT semiconductor company attempting survival through Bitcoin treasury strategy. Without insider trading data, it's difficult to gauge management conviction, but major institutional selling and repeated capital raises are negative signals. Recent small purchases by insider Daniel Asher are positive but insufficient to change the overall picture. From an investor perspective, here's the key: The current $5.10 price is 75% below the $20 analyst target, but it also embeds bankruptcy risk. Risk-tolerant investors who can withstand extreme volatility might consider small, diversified positions betting on turnaround potential. However, for most general investors, risks overwhelm potential rewards. The February 10 earnings report will be the most critical inflection point. Until then, waiting and watching is prudent. If considering investment, wait to confirm Q4 revenue exceeds $6 million and management presents a clear path to profitability. For now, this is closer to speculation than investment.