Michael Saylor, president of Strategy (formerly MicroStrategy), the largest bitcoin (BTC) holding company, is ramping up his multibillion-dollar investment in BTC.
In a recent report by Bloomberg, it was revealed that Saylor is working to increase the return on preferred stock, which he has identified as the company's main funding source going forward.
Investor confidence declines
During an earnings conference call, Saylor Shown The company is going through a critical stage. He noted that the NAV multiple is declining over time as the Bitcoin asset class matures and volatility declines.
As part of its latest financial developments, the strategy announced that the yield on its variable rate preferred shares (STRC) will rise by 25 basis points to 10.5% from November.
Thursday company I mentioned Net income of $2.8 billion for the quarter, largely due to unrealized gains from its large cryptocurrency holdings, valued at approximately $70 billion.
Even though Bitcoin reached record levels during the third quarter and many public companies emulated Saylor's treasury model created five years ago, investor confidence is waning.
Shares of Strategy (MSTR) have fallen about 45% since hitting a record high last November, much of the premium the stock previously enjoyed over the course of its trading life. Bitcoin origins.
Furthermore, demand for preferred stock has been tepid, with recent sales falling short of Saylor's expectations for significant capital raises. This has led to a slowdown in Bitcoin purchases recently.
In response to these challenges, Strategy is exploring international capital markets and is considering launching exchange-traded funds (ETFs) backed by preferred stocks, CEO Fong Le explained during the earnings call.
Saylor is open to the stock sales strategy
Following the release of the second quarter results, the strategy committed not to issue new common shares for less than 2.5 times its net asset value, excluding debt interest coverage or… Preferred dividends.
However, Saylor indicated his willingness to tap the market opportunistically when the premium is favourable, using stock sales to fund additional Bitcoin purchases. Despite attempts to reassure shareholders, the company later issued more common shares, raising doubts.
Gus Gala, an analyst at Monness Crespi Hardt & Co., expressed concerns about potential dilution, noting that if current sales go through, the dilution could become significant.
In its most recent earnings report, the strategy confirmed that it had not issued shares under it Common stock ATM program This month, it reiterated its commitment to a disciplined approach to raising money through equity.
The company also adopted new accounting standards in January that require it to include the fair value of its bitcoin holdings in its earnings reports. This change has led to significant swings between profits and losses over the past two quarters, including a loss of nearly $340 million in the same period last year.
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