Michael Saylor’s company, Strategy, could sell up to $5 billion worth of Bitcoin as part of a new capital management plan unveiled after a staggering $8.22 billion net loss in the second quarter. The loss was driven primarily by an $8.32 billion markdown in the value of its Bitcoin holdings, which now trade below their original purchase price.
Strategy holds 843,775 BTC, bought at an average price of $75,476 each. After the earnings report, Bitcoin hovered around $64,700, pushing the market value of these holdings down to about $54.77 billion from an original cost of $63.69 billion. The company's stock reacted sharply, dropping 4.56 percent to roughly $93.28 as investors digested the shifts in Strategy’s approach to capital allocation.
Capital Moves Focus on Reserves and Dividends
Under the new framework, Strategy could monetize its Bitcoin stash to support various financial needs. Up to $1.25 billion may go toward bolstering USD reserves, while $1.76 billion could cover annual preferred dividends and interest expenses. also as much as $2 billion might be directed to buybacks of common stock and digital credit securities, with separate $1 billion repurchase programs already set for these assets.
This marks a shift from Strategy’s traditional strategy of accumulating Bitcoin without selling. So far this year, the company has sold roughly $218.4 million in Bitcoin, using proceeds to fund preferred dividends. Future capital raises won’t be funneled entirely into Bitcoin acquisitions but split between BTC and cash reserves depending on market conditions.
Management has ruled out borrowing backed by Bitcoin, citing risks related to counterparties and margin calls. Analysts have noted that Strategy’s focus has pivoted toward restoring the value of its STRC preferred stock, with TD Cowen maintaining a Buy rating and a $260 price target post-earnings. Benchmark, however, lowered its price target from $570 to $435 while keeping its rating intact.
This content is for informational purposes only and does not constitute financial advice.
