Strategy Inc. (NASDAQ: MSTR) experienced a significant surge on Thursday, with shares climbing 17.6% as Bitcoin's price rally pushed the stock to a 12% premium over its net asset value. The stock closed the regular session at $144.82, before adding another 0.4% in after-hours trading to reach $145.44, according to Nasdaq market data.
The move came as Bitcoin traded at $82,254.40 as of 17:34 EDT, up more than 4% on the day. The cryptocurrency's advance was fueled by comments from Federal Reserve Governor Christopher Waller, who suggested that underlying inflation is "doing better than the core numbers suggest," according to CoinDesk live coverage. This reduced expectations for further rate hikes, providing a tailwind for risk assets like Bitcoin.
Strategy's total Bitcoin holdings now stand at 845,050 coins, valued at approximately $69.51 billion based on Thursday's spot price. Combined with $6.71 billion in declared dollar assets, the company's gross reserve assets reach $76.22 billion. After deducting $6.75 billion in debt and approximately $14.81 billion in preferred stock, the estimated net reserve value is $54.66 billion, against an equity value of $61.15 billion, implying a premium of 11.9%.
The premium is a critical metric for the company, as it determines the attractiveness of issuing new common stock. Last week, Strategy sold 4.53 million common shares, raising $602.8 million. Of that, $369.7 million was used to acquire 4,603 Bitcoin, while $151.8 million went toward buying back preferred stock, according to a Form 8-K filing.
However, the recent stock offering has diluted Bitcoin per share. The company reported that Bitcoin per diluted share fell 5.3% from August 10 to August 31, from 198,289 satoshis to 187,751 satoshis. The company's "BTC yield"—a key performance indicator—stood at -11.8% for the quarter and -3.7% year-to-date, reflecting the impact of dilution.
The software segment remains a minor part of the business. Second-quarter revenue rose 6.9% to $122.4 million, but gross margin contracted by 2.2 percentage points to 66.6%. The company's primary focus is on its Bitcoin treasury strategy, which has drawn both praise and criticism from investors.
Chief Financial Officer Andrew Kang highlighted the 10.8% Bitcoin threshold as the company's "current effective cost of credit," noting that borrowing expenses remain a key barrier to further expansion. While Thursday's lower yields provided support to the equity, the spread requirement remains unchanged.
Risks remain elevated. Bitcoin is prone to sudden reversals, and if the equity premium contracts, common stock issuance may offer less accretion. Debt, preferred dividends, and potential share dilution all take precedence over common shareholders' claims.
Looking ahead, investors will focus on Friday's U.S. payrolls data and next week's August inflation figures. Additionally, Strategy's upcoming weekly filing will be closely watched for any new issuance and changes to Bitcoin per share. The company's ability to maintain its premium while managing dilution will be key to its stock performance in the near term.
