Strategy authorized the sale of up to $1.25 billion of its Bitcoin holdings to replenish cash reserves, marking a reversal of the company's years-long policy of acquiring and never selling the cryptocurrency. The decision follows the company's mNAV ratio — the measure of its enterprise value relative to its Bitcoin holdings — falling below 1 on Friday, signaling the market now values the firm at less than the Bitcoin it holds. The shift undermines the self-reinforcing funding model that enabled Strategy, led by Michael Saylor, to become the largest corporate holder of Bitcoin by issuing stock at a premium to its Bitcoin value and using proceeds to acquire more coins.
Strategy Authorizes Bitcoin Sale and Launches Dual Buyback Programs
Strategy's board approved what the company called a Bitcoin Monetization Program, authorizing the sale of up to $1.25 billion of Bitcoin to build or replenish its U.S. dollar reserve. The board simultaneously launched two $1 billion programs to buy back common and preferred shares. Strategy's cash reserve currently stands at approximately $2.55 billion. The board established a new policy requiring the company to hold at least 12 months of preferred-dividend and interest payments in cash. Strategy holds Bitcoin worth roughly $51 billion, but its shares have fallen nearly 80% over the past year. The company recently raised the dividend on its STRC preferred shares to 12%. Michael Saylor stated the firm would remain disciplined in issuing new MSTR stock, particularly when shares trade at or near 1x mNAV.
mNAV Metric Falls Below Parity for First Time
Strategy's mNAV ratio, which measures the company's enterprise value against the worth of its Bitcoin holdings, fell below 1 on Friday. This means the market now values the company at less than the Bitcoin it holds. The premium above 1 had previously allowed Strategy to issue stock above the value of its coins and recycle the proceeds into additional Bitcoin purchases. "Both the common and preferred shareholders, they are effectively saying we are going to sell Bitcoin to support shareholders," said Bohan Jiang of FalconX. With the premium eliminated, the mechanism that drove Strategy's Bitcoin accumulation can operate in reverse.
Common Shares Rise 5% in Pre-Market Trading
Strategy's common shares rose approximately 5% in pre-market trading following the announcement of the Bitcoin Monetization Program and dual buyback programs.
FAQ
What did Strategy authorize on Friday?
Strategy's board authorized the sale of up to $1.25 billion of Bitcoin through a Bitcoin Monetization Program to build or replenish its U.S. dollar reserve. The board also approved two $1 billion programs to buy back common and preferred shares.
Why did Strategy reverse its never-sell Bitcoin policy?
The reversal followed the company's mNAV ratio falling below 1 on Friday, meaning the market now values Strategy at less than the Bitcoin it holds. This eliminated the premium that previously allowed the company to issue stock above Bitcoin value and use proceeds to acquire more coins. The board also established a policy requiring at least 12 months of preferred-dividend and interest payments held in cash, with current reserves at approximately $2.55 billion.
How did the market respond to Strategy's announcement?
Strategy's common shares rose approximately 5% in pre-market trading after the company disclosed the Bitcoin Monetization Program and dual buyback programs.
