Saylor reaffirms commitment to Bitcoin amid investigation and pressure on Strategy's capital
Michael Saylor, co-founder and chairman of Strategy, has made a public statement for the first time in a long while. On June 26, he posted on X, confirming that the company remains committed to Bitcoin. This statement came amid several alarming signals: a legal investigation into Strategy's securities and growing pressure on its capital structure.
Silence in Response to the Investigation
Notably, Saylor did not directly mention either the investor class-action lawsuit or the investigation initiated by the law firm Rosen Law Firm. The latter is trying to determine whether Strategy's top management misled investors regarding five securities issuances. Instead, Saylor emphasized discipline in capital management and long-term value. This signal is addressed to both the company's shareholders and creditors.
Strategy holds 847,363 bitcoins on its balance sheet, accounting for more than 4% of the total that will ever be issued. The average purchase price is approximately $75,500 per coin, significantly higher than the current exchange rate. Due to this gap, the premium on MSTR shares, which investors paid for indirect leveraged access to Bitcoin, has shrunk.
Pressure on Preferred Securities
Strategy acquired most of its Bitcoin through several issuances of preferred shares traded on the stock exchange. These securities are currently under pressure due to the weakening Bitcoin exchange rate and declining market confidence in the dividend model.
The day before Saylor's statement, prominent critic Peter Schiff once again criticized the weak performance of Strategy's stock. According to him, MSTR shares have fallen 84% from their all-time high, and the preferred STRC securities have dropped 25% from their par value—their yield reaching 15.3%. Saylor's post appears to be an indirect response to this criticism, although he did not address it directly.
Questions about the long-term sustainability of STRC are becoming increasingly stringent. Paying dividends on these securities costs approximately $1.2 billion per year, while the company recently disclosed only $1.4 billion in cash reserves. This would last about a year under current conditions.
My expert opinion: Saylor's statement is an attempt to calm the market and show that the company is not deviating from its strategy. However, fundamental problems, including the gap between Bitcoin's purchase price and its current exchange rate, as well as high dividend obligations, remain. Whether Saylor can restore investor confidence or the investigation escalates to a new legal level will largely determine Strategy's fate in the coming months.