Strategy Reinvests $357 Million in Bitcoin Following Resumption of Common Stock Sales to Finance BTC Acquisitions

Strategy, previously MicroStrategy, invested $357 million in Bitcoin last week, marking its first use of common stock to finance acquisitions in nearly a month, according to a press release.

Based in Tysons Corner, Virginia, the firm issued $310 million in Strategy shares to finance its recent acquisition. This step indicates a return to regular operations after the company made adjustments to its corporate strategy.

Last week, Strategy hinted at altering a newly introduced equity issuance policy, limiting its ability to issue common shares when its stock was valued under specific thresholds. Although the policy was designed to show “discipline,” the company allowed flexibility, stating that it could set aside the policy “when otherwise deemed advantageous.”

The company declared it would no longer issue common stock when its so-called mNAV was below 2.5 times, or its shares traded below a 2.5x premium relative to its Bitcoin assets. Analysts welcomed this change when it was shared over a month ago during Strategy’s second-quarter earnings report, which boasted $10 billion in profit.

Strategy’s shares dropped nearly 2.7% to $348 on Monday, according to Yahoo Finance. The stock is down significantly from a peak of $457 last month, though it remains up 20% since the start of the year. Meanwhile, Bitcoin’s price has dipped to $112,580, a 1.6% drop in the last 24 hours, though it also sees a 20% increase year-to-date, as per crypto data provider CoinGecko.

When Strategy’s shares are trading at a premium to its Bitcoin holdings, the firm can increase its Bitcoin ownership per share by issuing common stock. This year, Strategy has introduced various types of preferred shares as an alternative funding source.

The most recent Bitcoin acquisition by Strategy was partly funded through its SRTK, STRF, and STRD offerings. Recently, the company raised about $47 million by selling preferred stocks, which include various obligations and dividend payouts.

Damped Spring Advisors CEO and CIO Andy Constan has likened Strategy to a Ponzi Scheme, claiming the company will be obliged to issue common stock to cover the dividends promised to its preferred shareholders.

Decrypt reached out for a comment from Strategy.

Under an at-the-money (ATM) offering program set up in May, Strategy can issue up to an additional $16.7 billion in common stock to increase its assets. As of Monday, the Bitcoin-investing firm held approximately 632,500 Bitcoin valued at $70.5 billion, as reported by Bitcoin Treasuries.

In certain respects, Strategy’s change in stance on equity issuance can be seen positively, according to Steven Lubka, VP of investor relations at Bitcoin treasury firm Nakamoto. It complicates any predictions regarding the next steps for the company’s funding, he informed Decrypt.

“It makes him less predictable,” Lubka stated, referring to Strategy co-founder and Executive Chairman Michael Saylor. “The ultimate outcome is that you can no longer anticipate if he will access the ATM on a weekly basis.”