For years, the stock of Strategy Inc. (Nasdaq: MSTR) traded as a speculative, leveraged bet on the price of bitcoin, often reaching valuations two or three times the value of the coins held on the company's balance sheet. It was this gap, known as the market-to-net asset value (mNAV) ratio, that allowed the company to issue new shares, buy more bitcoin, and repeat the cycle.
In a recent episode of Laura Shin's "Unchained" podcast, Hayes stated that this cycle is coming to an end as bitcoin's price surge has not reversed but merely paused. He noted that for Strategy's model to break down, it isn't necessary for bitcoin's price to fall. It is enough for it to stop rising.
On August 25, bitcoin briefly surpassed the $81,000 mark before retreating to levels in the upper $70,000 range—a kind of sideways movement that Hayes says is damaging to Strategy's structure. With the company's mNAV shrinking to approximately 1.01x, and the basic and diluted figures as of August 27 at 0.73x and 0.74x respectively, Strategy's stock is now trading close to the book value of the 840,447 $BTC reflected in its accounts. As a result, there is virtually no premium left to fund another buying cycle.
Three Options, None Ideal
Hayes notes that the shrinking premium leaves Saylor with three levers to pull, each carrying costs. He outlined the following scenarios:
- Strategy could issue new shares, but doing so without a significant premium would dilute existing shareholders rather than reward them.
- It could directly sell bitcoin, which would go against the "never sell" principle that built investor loyalty to the company's stock.
- It could cut dividends on its preferred shares, risking the loss of trust from income-focused investors who bought the shares for yield, not as a bitcoin play.
This tension is very real, given that, as Bitcoin.com News reported in May, Strategy owned 818,334 $BTC with an average cost of $75,537 per coin, while the aggregate obligations for its two preferred share instruments amounted to roughly $1.5 billion per year: STRK with an 8% yield and STRC with a 10% to 11.5% yield.
At the dividend payout rates observed in May, the company had roughly 18 months of coverage left before it would need a new source of funding. Saylor said at the time that the company would "probably sell some bitcoin to pay the dividends, just to placate the market"—a phrase Hayes has since mocked, accusing Saylor of using "Jedi mind tricks" on investors by confusing them about how far these sales might ultimately go.
Hayes's broader argument is not that Strategy will collapse overnight, but that the original raison d'être for the stock—providing investors a way to pay a premium for equity-based access to bitcoin—ceases to make sense once bitcoin's price moves sideways rather than exponentially higher.
He told investors that anyone wanting direct exposure to bitcoin through a brokerage account could instead simply buy a spot exchange-traded fund (ETF), without paying for Strategy's leverage or bearing the burden of its dividend obligations.
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