Strategy Inc has executed a significant capital management maneuver, selling $335.5 million in common stock through its at-the-market (ATM) program. This move, which far exceeded the company's concurrent bitcoin purchase of $34.9 million for 520 BTC, has boosted the firm's cash reserves to approximately $1.4 billion. The development comes as investors closely monitor the performance of Strategy's STRC preferred shares, which continue to trade below their $100 par value, raising concerns about the company's funding costs.
According to a recent filing, Strategy's total bitcoin holdings now stand at 847,363 BTC, acquired at an average price of $75,651 per coin. However, only about 11% of the proceeds from the common stock sale were used for the bitcoin acquisition, with the majority allocated to strengthening the company's cash position. This marks a notable shift in Strategy's approach, as the company historically funneled nearly all new capital into bitcoin purchases.
STRC preferred shares have been under significant pressure, recently hitting a record low of $82.53 before recovering slightly to $90.23. The preferred stock's weakness is critical because it could increase the company's cost of capital if it remains below par, making future issuances more expensive. In response, Strategy has adjusted its dividend schedule, moving to two monthly payment dates for STRC starting July 15, with an annual dividend rate of 11.5%.
Analysts are divided on the implications. Mark Palmer of Benchmark-StoneX suggested that Strategy could raise the STRC dividend to support the share price back toward par. Conversely, James Butterfill of CoinShares noted that a bitcoin rebound does not automatically increase available cash. On-chain analyst Axel Adler Jr. warned that Strategy's financing machine has started to creak, cautioning that the so-called Saylor bid—where the company backs bitcoin drops with new securities—could vanish if STRC does not stabilize.
The company's cash reserve is crucial for covering preferred stock dividends and debt interest, as bitcoin holdings do not generate income unless sold or used as collateral. With bitcoin trading around $64,914, Strategy's holdings are valued at roughly $55.0 billion, below the $64.10 billion total cost. This gap underscores the importance of the cash reserve in maintaining financial flexibility.
In a related development, Strategy sold 32 bitcoin for $2.5 million in June, with proceeds directed toward preferred stock distributions. This small sale marks a departure from the company's previous strategy of never selling bitcoin, signaling a pragmatic approach to managing its capital structure.
Looking ahead, the market is watching for further ATM filings and the July dividend schedule. If bitcoin rises above Strategy's average purchase price and STRC recovers to near par, the company's financing setup could reopen, making the recent dilution appear more protective than distressed. However, if bitcoin remains below cost and STRC continues to struggle, Strategy may need to rely more on stock sales, increase preferred payouts, or reduce bitcoin purchases to conserve cash.
Strategy's stock rose 2% to $114.81 midmorning, while STRC gained 1.9% to $90.23. Bitcoin held steady around $64,914. Other crypto stocks also advanced, with Coinbase up 2.5% and Marathon Digital gaining 12.8%. However, Strategy's stock is increasingly moving on its capital-raising ability rather than just bitcoin price action.
