Will Michael Saylor’s Strategy Sell $5B in Bitcoin as Loss Hits $8.2B?

Michael Saylor’s Strategy could sell up to about $5 billion in Bitcoin under its capital management framework as the company shifts attention to reserves, dividends, and buybacks after a large quarterly loss.

Strategy Weighs Bitcoin Sales After Q2 Loss

Strategy reported a net loss of $8.22 billion for the second quarter. The loss was driven mainly by an $8.32 billion fair-value decline in its Bitcoin holdings.

The company held 843,775 BTC as of today, acquired at an average cost of $75,476 each, while Bitcoin traded near $64,700 after the earnings report.

That price left Strategy’s Bitcoin position below its total purchase cost. The company’s holdings had an original cost of $63.69 billion and a market value of about $54.77 billion.

Strategy’s stock slipped after the results, falling as investors reviewed the company’s new capital plan. MSTR traded near $93.28, down 4.56%, after the earnings update.

Michael Saylor said Strategy increased Bitcoin holdings by 11% in the quarter. He also pointed to an 18% reduction in convertible debt and a 12% increase in USD reserves.

Capital Plan Could Fund Reserves and Dividends

Strategy’s capital management framework could allow up to about $5 billion in Bitcoin monetization. The funds could support reserves, preferred dividends, interest payments, and buybacks.

The framework could direct up to $1.25 billion toward USD reserves. It could also help cover about $1.76 billion in annual preferred dividends and interest payments.

Strategy may also use up to $2 billion for common stock and digital credit security buybacks. The company has created separate $1 billion repurchase programs for those securities.

The company has already sold about $218.4 million of Bitcoin this year. Those sales helped fund preferred dividends, marking a change from its long-standing Bitcoin accumulation approach.

Management said future capital raises will not go entirely toward Bitcoin purchases. Proceeds may be split between BTC and USD reserves, depending on market conditions.

Strategy also said Bitcoin-backed borrowing is not currently under review. The company cited counterparty and margin risks as reasons for avoiding that option.

STRC Preferred Stock Becomes Main Focus

Analysts said Strategy’s management is now focused on returning STRC preferred stock to par. TD Cowen reiterated a Buy rating and kept its $260 target after the Q2 update.

Benchmark also kept its rating on Strategy but lowered its price target to $435 from $570. The firm also pointed to STRC preferred stock parity as a central management goal.

H.C. Wainwright also reiterated its Buy rating on Strategy and maintained a $325 price target. The firm said Strategy’s capital management approach could support STRC during the Bitcoin drawdown, with further upside tied to stronger BTC sentiment and improvement in MSTR’s mNAV.

Source: X

Strategy’s preferred equity structure has become an important part of its funding model. The company has used preferred stock issuance to raise capital while managing its Bitcoin strategy.

The firm raised about $17.06 billion through capital markets programs this year. It also reduced convertible debt to $6.71 billion after repurchasing $1.5 billion of notes at a discount.

Strategy’s USD reserve reached $3.75 billion at quarter-end. Management said that reserve covers more than 2.1 years of preferred stock dividends and debt interest obligations.

The company’s next steps will depend on Bitcoin prices, STRC trading levels, reserve needs, and investor demand. Strategy remains the largest corporate Bitcoin holder, but its latest plan gives management more flexibility to sell BTC when needed.