Offerings

In brief

• Strategy purchased roughly 3,000 Bitcoin worth $357 million.
• The company issued common stock to fund the purchase.
• The move conflicted with a newly adopted equity issuance policy.

Strategy, formerly MicroStrategy, purchased $357 million in Bitcoin last week, selling common stock to fund acquisitions for the first time in nearly a month, the company said in a press release.

The Tysons Corner, Virginia-based firm issued $310 million worth of Strategy shares to fund its latest purchase. The move represented a return to normal after the Bitcoin-buying firm made a series of adjustments to its corporate playbook.

Strategy signaled a week ago that it was modifying a newly adopted equity issuance policy, which restricted its ability to issue common shares when its stock traded at a certain valuation. Although the framework was intended to show “discipline,” Strategy gave itself some wiggle room by saying the framework would be set aside “when otherwise deemed advantageous.”

The company said it would no longer issue common stock when Strategy’s so-called mNAV was below 2.5x, or its shares traded at less than a 2.5x premium to its Bitcoin holdings. Analysts lauded the shift when it was announced less than a month ago alongside Strategy’s second-quarter earnings performance, marked by $10 billion in profit.



Strategy shares fell nearly 2.7% to $348 on Monday, according to Yahoo Finance. The stock has cooled significantly from a high of $457 last month, but shares are still up 20% year-to-date. The price of Bitcoin, meanwhile, fell to $112,580, down 1.6% over the past 24 hours, although BTC is up 20% year-to-date, according to crypto data provider CoinGecko.

When Strategy’s shares trade at a premium to its Bitcoin holdings, the company is able to grow the amount of Bitcoin it owns per share issuing common stock. This year, Strategy has introduced several types of preferred shares as a new source of funding.

Strategy’s most recent Bitcoin purchase, for example, was partly funded by its SRTK, STRF, and STRD offerings. Strategy most recently raised around $47 million by selling the preferred stocks, which carry various obligations and dividend payments.

Damped Spring Advisors CEO and CIO Andy Constan is among those that have compared Strategy to a Ponzi Scheme, arguing the firm will have to issue common stock to fund dividends that it’s obligated to routinely pay its preferred shareholders.

Decrypt reached out to Strategy for comment.

Under an at-the-money (ATM) offering program established in May, Strategy can issue another $16.7 billion in common stock to pad its stockpile. As of Monday, the Bitcoin-buying firm held roughly 632,500 Bitcoin worth $70.5 billion, according to Bitcoin Treasuries.

In some ways, Strategy’s about-face on equity issuance is advantageous, according to Steven Lubka, VP of investor relations at Bitcoin treasury firm Nakamoto. It makes the company’s next funding move all that much harder to see coming, he told Decrypt.

“It makes him harder to predict,” Lubka said, referring to Strategy co-founder and Executive Chairman Michael Saylor. “The end state of this is that now you really don’t know if he’s going to hit the ATM every week.”

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