Michael Saylor Details How Future Bitcoin Sales Will Fuel Stock Buybacks

Michael Saylor shared a new plan for Strategy Inc. to use bitcoin sales as a potential source of funding for repurchasing preferred stock. This approach builds on the company's ongoing strategy, aiming to keep buybacks efficient and targeted while maintaining stable trading in their preferred shares.

Saylor, who serves as Executive Chairman of Strategy Inc. (Nasdaq: MSTR), explained that the company might switch between selling bitcoin or its own stock to finance repurchases of its Variable Rate Series A Perpetual Stretch Preferred Stock (STRC), depending on market conditions. STRC shares have a $100 stated amount, and management monitors their dividend rate every month to make informed decisions.

Buying at a Discount to Lower Dividend Costs

Bitcoin sales could be a favored option when STRC trades below its $100 face value. By repurchasing shares at a discount, Strategy can effectively retire preferred stock at a lower cost and reduce future dividend obligations. During the week ending July 26, the company bought back 288,930 STRC shares for about $25 million, paying an average of $86.52 per share roughly $13.48 less than the stated amount before factoring in saved dividends.

Strategy’s President and CEO, Phong Le, emphasized that repurchasing at discounted prices is a smart capital allocation. The company plans to increase buybacks when STRC prices fall further below $100, and slow down as the price moves closer to its stated amount. This disciplined strategy is designed to maintain liquidity and market demand, strengthening the stock’s trading environment.

This buyback program is part of Strategy’s broader digital credit capital framework, which avoids issuing new STRC shares below the $100 threshold. With nearly $1 billion left under the preferred securities repurchase authorization, management has ample capacity to continue these transactions at favorable prices.

Meanwhile, Strategy keeps its USD reserves separate from these buybacks to ensure flexibility and financial stability. The company’s approach focuses not only on managing its preferred stock but also on balancing volatility and liquidity in the market for STRC shares.

This article covers financial moves by Strategy Inc. and does not serve as investment advice.