Strategy (NASDAQ: MSTR) saw its shares return to the $100 mark on Friday, closing at $100.01, a 3.3% gain for the day and a 7.2% increase over the week. The rebound came amid a broader rally in crypto-related equities, yet the underlying economics for common shareholders have deteriorated, according to the company's latest Bitcoin-per-share (BPS) calculations.
The company's gross Bitcoin per diluted share stood at just 0.3% higher than on March 31, despite a 4.8% increase during the second quarter. By August 2, however, nearly all of that gain had evaporated, with BPS falling 4.3% from June 30. The erosion is attributed to a rise in the diluted share count, which grew 4.0% over the same period, outpacing the modest 0.5% decline in Bitcoin holdings.
Management uses BPS to assess whether Bitcoin acquisitions are benefiting common shareholders. The metric is calculated by dividing total Bitcoin holdings by the estimated diluted share count. The recent trend suggests that while the company continues to accumulate Bitcoin, the dilution from share issuance and other capital actions is offsetting those gains.
During the week ending August 2, Strategy engaged in significant capital activity. The company sold 3.01 million MSTR shares, raising $290.6 million net, and sold 1,638 Bitcoin for $104.73 million net. Proceeds were allocated to set aside $250 million, repurchase $81.2 million of STRC preferred shares, and fund $52.4 million in dividends, among other uses. Notably, no common shares were bought back despite a $1 billion authorization.
CEO Phong Le defended the preferred share repurchases as "an attractive use of capital," since they reduce future dividend obligations at a discount. However, the lack of common share buybacks and the ongoing dilution raise questions about the company's commitment to enhancing per-share value.
Analysts remain cautiously optimistic. Cantor Fitzgerald, B. Riley, Barclays, and H.C. Wainwright all maintained positive ratings, though several lowered their price targets. The consensus from 18 analysts is a Moderate Buy with an average target of $242.81, implying significant upside from Friday's close.
Strategy reported a net loss of $8.22 billion for the second quarter, driven by an unrealized digital-asset loss of $8.32 billion. Revenue rose 6.9% to $122.4 million. With Bitcoin trading at $64,852 late Friday, the company's 842,138 coins are valued at approximately $54.6 billion, about $8.9 billion less than the $63.51 billion acquisition cost.
Looking ahead, next week's U.S. economic data, including July CPI, PPI, and retail sales, could influence Bitcoin and interest rate expectations. The key challenge for Strategy remains the math: new Bitcoin acquisitions must outpace the growth in diluted shares to improve BPS. Friday's share price recovery does not alter that fundamental equation, and weekend Bitcoin volatility could reverse the gains.
