Strategy raised $334 million through stock sale but did not buy bitcoin

Strategy raised $333.7 million through a stock sale last week but did not spend a single cent on buying bitcoin—the company's reserves remained unchanged at 840,447 $BTC.

From August 10 to 16, the company sold 3.46 million MSTR shares. This is stated in the 8-K report filed with the Securities and Exchange Commission (SEC).

The proceeds were allocated as follows: $52.4 million was directed to pay the bimonthly dividends on STRC preferred shares; $132.2 million was spent on repurchasing the same securities; $149.1 million was added to the company's dollar reserves.

During the week, Strategy repurchased approximately 1.39 million STRC shares worth $132.2 million. Meanwhile, the company did not repurchase any other preferred securities, nor any common MSTR shares.

STRC securities fell 0.12% in premarket trading on August 17, to $94.67, and on Friday, August 14, closed down 1.03%—at $94.78. These data are provided by Yahoo Finance.

During the reporting period, the company neither bought nor sold any bitcoin. The 840,447 $BTC were acquired for $63.36 billion, including fees and expenses, at an average purchase price of $75,385 per coin.

Strategy's dollar reserves as of August 16 amounted to $4.8 billion—including expected but not yet accounted-for proceeds from the stock sale. This reserve is intended to cover dividends on preferred securities and interest payments on the company's debt obligations.

AI Opinion

From a structural analysis perspective, an interesting detail that remained outside the scope of the article is that Strategy has previously changed its financing model, shifting from common MSTR shares to STRC preferred securities and back—depending on which instrument the market is willing to buy at a higher price. The sale of common shares last week may indicate that the premium of MSTR relative to the value of the bitcoin portfolio temporarily appears more attractive than the terms for placing STRC.

From a macroeconomic standpoint, the situation resembles the operation of closed-end investment funds, which periodically issue new securities not to grow the portfolio, but to maintain their own share price and obligations to holders. Technically, such a structure is sustainable as long as the market accepts the company's shares at a price above the book value of the underlying asset. What will happen to Strategy's financing model if the premium of the shares to the bitcoin reserves decreases simultaneously with a decline in the price of STRC—is a question worth keeping in mind.