In brief
- Strategy lifted its cash reserves to $3 billion via common stock proceeds, skipping a Bitcoin buy for the third straight week.
- Since July 22, the company has generated $215 million in proceeds from Bitcoin sales, less than half the amount of its latest fundraising.
- At Bitcoin's recent price, the firm’s stockpile stood around $11 billion underwater.
Strategy’s Bitcoin-buying machine remained in neutral last week as the firm continued growing its cash reserves, forgoing acquisitions of the digital asset for a third straight week.
The company raised $467 million during the period by issuing common stock, lifting the balance of its so-called USD Reserve to $3 billion, according to an announcement.
Shares of Strategy were down 4% following the opening bell, changing hands around $90.80, according to Yahoo Finance. Although the firm’s stock price has tumbled 18% over the past month, it has steadied since hitting a 28-month low of $81.81 in late June.
Strategy’s flagship preferred stock, Stretch (STRC), had edged down to $87.04, after approaching its highest point in nearly a week in pre-market trading. Since mid-May, the product that currently offers a 12% annual dividend has lingered below its $100 par value, while notching record lows.
The company’s latest move underscored its commitment to ensuring that it can fulfill preferred stock dividend payments and debt interest obligations, padding its cash cushion to record levels following the adoption of a capital management framework weeks ago.
In a note shared on Monday, Benchmark-StoneX Managing Director and Senior Research Analyst Mark Palmer shared that Strategy added around 18% to its cash reserves in a single move, providing the firm with more than 20 months’ worth of coverage for its annual dividend and interest obligations of $1.76 billion.
“The entirety of the company's capital markets activity during the week was channeled toward fortifying the balance sheet's cash cushion,” he added.
The framework marked a significant shift for Strategy, formalizing conditions under which the world’s largest corporate holder of Bitcoin could sell the digital asset. On Monday, the company’s stockpile of 843,775 Bitcoin was valued around $53 billion.
Since Strategy reported its last Bitcoin purchase on July 22, the company has generated around $215 million in proceeds from selling the digital asset. Those funds were earmarked for dividends and debt, mirroring the intent of its latest fundraising efforts.
Before Strategy formalized its new approach, some analysts voiced concerns that the company’s USD Reserve had worn too thin, intensifying scrutiny on the sustainability of “ballooning” costs tied to products such as Stretch that receive routine payouts.
“Orange dots tell only part of the story,” Strategy co-founder and Executive Chairman Michael Saylor said in an X post on Sunday, hinting at the company’s shifting scope alongside a chart of the Bitcoin-buying firm’s recent purchases.
The company’s willingness to tap Bitcoin as a source of liquidity for its cash reserves represented a reversal of Saylor’s buy-and-never-sell mantra, but some analysts say the shift toward “two-way capital allocation” is ultimately in the company’s best interest.
On Monday, Bitcoin had fallen 2.3% over the past 24 hours to $62,600, according to CoinGecko. With an average purchase price of $75,476 per Bitcoin, that meant Strategy’s stockpile remained roughly $11 billion underwater.