Seilor makes a move: Strategy doubles down on bitcoin amid investigation and market pressure
Michael Saylor broke his silence for the first time in a long while. On June 26, he posted a statement on social media platform X, confirming that Strategy remains committed to its Bitcoin strategy. This came amid two factors: an investigation by the law firm Rosen Law Firm and growing pressure on the company's capital structure.
In his post, Saylor sidestepped the class-action lawsuit from investors and the decline in the value of Strategy's preferred shares. Instead, he emphasized discipline in capital management and long-term value creation. This is a clear signal to both shareholders and creditors: the company has no intention of deviating from its course.
Numbers that speak for themselves
Strategy holds 847,363 Bitcoin on its balance sheet, accounting for over 4% of the total supply that will ever be issued. The average purchase price is around $75,500 per coin, notably higher than the current exchange rate. This gap has led to a compression of the premium on MSTR shares, which investors paid for indirect leveraged exposure to Bitcoin. At the same time, interest is growing in how exactly the company finances new purchases.
Strategy acquired most of its Bitcoin through several issuances of preferred shares traded on the exchange. These securities are now under pressure due to the weakening Bitcoin price and declining market confidence in the dividend model.
Market pressure intensifies
The day before Saylor's statement, prominent critic Peter Schiff once again pointed out the weak performance of Strategy's shares. According to him, MSTR shares have fallen 84% from their all-time high, while STRC preferred shares have dropped 25% from their par value—their yield reaching 15.3%. Saylor's post appears as an indirect response to this criticism, though he did not address it directly.
Questions about the long-term sustainability of STRC are becoming more pressing. Dividend payments on these securities cost approximately $1.2 billion per year, while the company recently disclosed only $1.4 billion in cash reserves—enough for about a year under current conditions.
My analysis: Saylor is betting that Bitcoin will recover faster than the company's reserves run out. But if pressure on preferred shares continues and the Rosen Law Firm investigation escalates into full-fledged litigation, Strategy could face a liquidity crisis that no tweet can solve. The company's fate will be decided not in the market, but in the courtroom.