Strategy Shares Dip Despite $835 Million Bitcoin Purchase—Its Largest in 4 Months

In brief

Strategy unveiled its largest Bitcoin purchase in over four months
Michael Saylor recently said the company’s Bitcoin-buying activity is accelerating
The company was valued at a discount to its Bitcoin holdings.

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Strategy unveiled its largest Bitcoin purchase in over four months on Monday, spending $835 million on the asset as its price fell, according to a press release.

The Tysons Corner, Virginia-based firm now owns nearly 650,000 Bitcoin, which was worth around $61 billion. Bitcoin recently changed hands around $94,000, representing an 11% decline over the past week, according to crypto data provider CoinGecko.

Strategy’s latest Bitcoin purchase was boosted by the debut of its euro-denominated preferred share, which trades in Luxembourg under the ticker symbol STRE. The company gained roughly $700 in net proceeds from the offering, Strategy said in the press release.

Meanwhile, Strategy sold $136 million worth of preferred shares, which receive dividend payments. This year, Strategy has created four different types of preferred shares, as a way to augment its Bitcoin-buying activity with additional sources of funding.

Strategy shares fell 1.5% on Monday to just below $197, according to Yahoo Finance. As Bitcoin’s price has retreated from all-time highs, Strategy’s stock price has dropped 31% over the past month.

Last week, Strategy co-founder and Executive Chairman Michael Saylor said the company’s Bitcoin-buying activity was accelerating as the asset’s price hovered near a six-month low, while pushing away rumors that the firm was liquidating parts of its namesake stockpile.

“We bought bitcoin every day this week,” Saylor said on X on Friday.

The company has historically issued common stock to fund its Bitcoin purchases, but that method has become a less lucrative way to accumulate the asset, as the value of Strategy’s shares has approached the value of its Bitcoin holdings.

On Monday, Strategy continued to trade at a discount to its Bitcoin holdings, with a market cap of about $56.7 billion resulting in a so-called multiple-to-net asset value of 0.93x. Strategy is one of several Bitcoin-buying firms that has seen premiums evaporate in recent weeks.

The selloff in Strategy shares stems from investor concerns over dilution, crypto research firm 10x said on X on Sunday. This summer, Strategy tried to adapt its stance on issuing common shares to convey discipline, but the policy was modified to give Strategy greater flexibility.

Although onlookers have intensified scrutiny of Strategy’s business model, as its stock price has flipped negative on the year, some analysts think fears of a debt-fueled spiral are likely overblown, including TD Cowen analyst Lance Vitanza.

Strategy has issued billions of dollars in debt to fund its Bitcoin purchases, but none of those bonds begin maturing until 2028, he noted to Decrypt last week. Along those lines, he said it is “highly unlikely” that Strategy will be forced to sell Bitcoin to meet associated obligations.

What’s more, the company’s preferred shareholders aren’t legally entitled to dividend payments, meaning there is no credit default risk associated with the product, Vitanza noted. A dividend burden of $735 million per year also appears manageable, he added.

In a Myriad prediction market, 60% of respondents expect Bitcoin's next move to $85,000 instead of $115,000, a reversal of trendlines from last week that reflects the growing pessimism about crypto markets. Myriad is a unit of Dastan, the parent company of an editorially independent Decrypt.