Strategy announced plans to sell up to $1.25 billion in Bitcoin to increase cash reserves, cover investor payouts, and fund stock buybacks. The move, revealed on Monday, marks a shift from the company’s previous stance against selling Bitcoin holdings. This decision comes amid a 44% drop in Strategy’s stock over the past year, putting pressure on its financial stability, according to fortune.com.
The company’s executive chairman, Michael Saylor, who has been a vocal Bitcoin advocate, previously urged investors not to sell their Bitcoin. However, in June, Strategy sold $2.5 million worth of Bitcoin, signaling a change in approach. Alongside the potential $1.25 billion sale, the company plans adjustments to its dividend policy and authorized buybacks of up to $1 billion in preferred share products. Strategy’s shares rose nearly 3% Monday, while its preferred shares gained about 4%, per fortune.com.
This development is significant as Strategy has been one of the largest institutional buyers of Bitcoin, using the cryptocurrency as its primary treasury reserve asset. The company’s preferred shares, STRC, which were intended to maintain money-market-level stability, have fallen sharply, closing recently around $74, well below the $100 peg. The stock and preferred share declines have raised concerns about Strategy’s liquidity and investor confidence, highlighting the challenges faced by firms heavily invested in volatile digital assets, according to fortune.com.
Strategy’s executive chairman Michael Saylor reaffirmed the company’s commitment to Bitcoin despite the planned sales. The company’s shares traded near $86 on Monday, with STRC approaching $79. The firm also authorized up to $1 billion in buybacks of preferred shares as part of its efforts to stabilize its financial position, as reported by fortune.com.