In a move aimed at addressing concerns over its ability to sustain dividend payments on preferred stock, Strategy (MSTR), led by Executive Chairman Michael Saylor, announced the establishment of a $1.44 billion reserve. This financial cushion was created through the recent sale of common stock and is intended to ensure dividend payments for at least the next twelve months. The company has plans to bolster this reserve further, aiming to secure enough funds to cover dividends for a period of 24 months or more. CEO Phong Le highlighted that the reserve is currently sufficient for 21 months of dividends.
The announcement comes in light of a significant decline in bitcoin prices, which fell another 5% to $86,000 on Monday morning, well below the company’s previous year-end expectations of $150,000. As a result, Strategy has adjusted its financial forecasts, now projecting a full-year net income that could swing from a loss of $5.5 billion to a gain of $6.3 billion, depending on bitcoin’s performance. The company’s bitcoin yield target has also been revised downward from an expected 30% to a new range of 22%-26%. Additionally, the anticipated dollar gain from bitcoin investments has been cut to between $8.4 billion and $12.8 billion, down from $20 billion.
As part of its ongoing investment strategy, Strategy announced the acquisition of 130 bitcoins for $11.7 million, equating to roughly $89,860 per coin. This new buy increases the company’s total bitcoin holdings to 650,000 BTC, acquired for an average price of $74,436 per coin, totaling approximately $48.38 billion. The latest purchase was financed by the previous sale of 8.214 million shares of common stock, which generated $1.478 billion, most of which has been allocated to the newly formed dollar reserve.
Preliminary trading data indicated MSTR shares were down 4.4% in early trading, reflecting market reactions to bitcoin’s substantial overnight price drop and concerns surrounding the company’s adjusted financial outlook.
