Michael Saylor's Strategy Inc. is moving ahead with a new playbook. Instead of endlessly accumulating Bitcoin, the company is now focused on strengthening its capital structure. It is raising cash by selling some of its tokens and by issuing common stock. Strategy became prominent through years of steady Bitcoin purchases, and that buying habit was supported by a financing model built around share issuance and, later, preferred stock.
On Monday, the company told investors that it had sold about $105 million of Bitcoin in the prior week. In the same week, it sold three million common shares worth $291 million. The transactions were disclosed in a regulatory filing.
The company directed a portion of the equity offering into its cash reserves, lifting that pool to $4 billion, and spent about $81 million repurchasing the preferred shares. Those preferred shares had been trading at a discount to their intended value.
Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter
It was the first time Strategy had bought back a piece of its STRC preferred stock. That security was originally structured to stay close to par value.
These moves are part of a broader overhaul that Strategy unveiled at the end of June. That overhaul gave management more flexibility in several areas: selling Bitcoin, repurchasing securities, and protecting liquidity. Since the plan was announced, Strategy has sold Bitcoin on more than one occasion.
The actions are modest when measured against Strategy's huge balance sheet. Still, they represent the latest effort to deal with growing pressure on both Bitcoin's price and the financing model that had fueled the company's accumulation strategy for years.
Strategy's enormous Bitcoin stash has been a central part of its identity. No company holds more Bitcoin: the firm's position is still worth roughly $56 billion. That stash, however, has not insulated the stock from a sharp decline. By Friday, shares had lost about three-quarters of their value over the previous year to roughly $93, and they slipped more than 1% in pre-market trading Monday.
The recent transactions show how Saylor's company is trying to adapt to a period in which its preferred stock has lost favor with investors. With the common shares also under pressure, Strategy is relying on a combination of asset sales and equity offerings to manage its obligations and keep its balance sheet in order. The financing model that once supported years of Bitcoin accumulation depended on investor demand for new shares and preferred stock; that demand has faded as Bitcoin's price and Strategy's stock have slid. Whether this approach will restore confidence in the company remains to be seen, but the moves mark a clear departure from the relentless Bitcoin buying that once defined the firm.
Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets
