The prominent corporate bitcoin holder, Strategy (MSTR.US), has continued to expand its cryptocurrency holdings. According to a filing submitted to the U.S. Securities and Exchange Commission (SEC) on Monday, the company acquired 520 bitcoins between June 15 and June 21, with a total value of approximately $39.4 million. This marks the third consecutive week of bitcoin accumulation by Strategy.
It is noteworthy that the funds for this latest purchase were entirely sourced from the proceeds of Class A common stock sales, rather than the perpetual preferred stock financing instrument the company had previously heavily promoted. This indicates a shift back to traditional equity financing channels to support its bitcoin investments, occurring at a time when its preferred stock financing model is facing market scrutiny.
The filing reveals that following this latest acquisition, Strategy's bitcoin reserve has grown further, and the company's available reserve cash has increased by about $300 million to approximately $1.4 billion. As the publicly listed company holding the largest amount of bitcoin globally, Strategy has in recent years adhered to a strategy of "financing purchases and long-term holding." The company's co-founder and chairman, Michael Saylor, has long been one of the staunchest proponents in the cryptocurrency market of the "never sell bitcoin" mantra.
However, earlier this month, Strategy disclosed the sale of 32 bitcoins, drawing significant market attention. This was the company's first sale of the cryptocurrency since 2022. Although the sale size is negligible relative to its roughly $57 billion bitcoin portfolio, the move was viewed by the market as an important signal, as it broke from Saylor's long-held "buy only, never sell" narrative. At the time, the market widely interpreted the action as intended to demonstrate to investors that the company is willing to utilize its bitcoin assets to support preferred stock dividend payments when necessary.
Paradoxically, this step instead raised market concerns about the sustainability of its funding model. To mitigate the dilutive impact on existing shareholders from continuous common stock issuance, Strategy began issuing perpetual preferred stock on a large scale starting in 2025. The most notable product among these is the preferred stock known as Stretch Preferred Shares (STRC.US). Under its design, Strategy issues STRC preferred shares at a par value of $100 per share, using the raised capital to immediately purchase bitcoin, while investors receive an annual dividend yield exceeding 10%. The company currently offers an 11.5% annualized yield on these preferred shares and has raised the payout level multiple times to attract capital inflows.
Nevertheless, this financing model is coming under increasing pressure. Since its ex-dividend date on May 15, the market price of STRC has consistently failed to trade above its $100 par value. With the preferred shares trading at a persistent discount, Strategy is effectively raising capital at a higher-than-intended cost. Last week, STRC's closing price fell below $90, significantly under its issue price. This suggests that the model of raising funds via preferred stock issuance to buy bitcoin is being challenged. For this model to function sustainably long-term, the price appreciation of bitcoin must consistently outpace the growth rate of the company's preferred stock liability costs; otherwise, financing efficiency will continue to decline.
Strategy's recent renewed reliance on common stock financing may reflect management's cautious stance regarding current demand in the preferred stock market. Concurrently, investors are closely monitoring whether the company will sell more bitcoin to meet future dividend payment obligations and capital structure management needs.
At the time of reporting, Strategy's stock price was up 2.81% at $115.66. However, the stock has still declined nearly 70% over the past year. Over the same period, the price of bitcoin has risen approximately 2.4% to around $65,300, though it remains down about 37% from a year ago.
Comments