Shares of Strategy Inc. (MSTR) decreased by 1.41% following the sale of 3,588 Bitcoin, enabling funding for preferred stock dividends and reinforcing cash reserves. The stock traded at $99.35, reflecting a decrease after dipping below $96 earlier in the day.
Details of the Bitcoin Sale
The company sold the Bitcoin at approximately $216 million, dropping their total Bitcoin holdings to 843,775 coins. This was disclosed in their recent 8-K filing, which followed the approval of a new framework for allowing Bitcoin sales designated for dividend financing.
Between Monday and Tuesday, Strategy sold 1,363 Bitcoin at an average price of $59,256. Additionally, another 2,225 Bitcoin was sold from Wednesday to Sunday at an average price of $60,773. These transactions amounted to around 0.42% of Strategy's overall Bitcoin holdings. A smaller release of 32 Bitcoin was also noted in early June, marking the first reported Bitcoin disposal since a tax-loss sale in 2022.
Impact on Stock and Capital Condition
The proceeds from this sale were directed towards funding preferred stock dividends and replenishing the U.S. dollar reserve, which remains at $2.55 billion since July 5. The annual dividend rate on the preferred stock increased to 12%. However, shares of the STRC preferred stock were trading below their $100 par value at $88.70 in pre-market sessions, placing more pressure on the financial model of Strategy and potentially limiting future fundraising opportunities.
MSTR shares felt the effects of this decline after previously witnessing five consecutive days of gains. The stock has underperformed significantly over the past month, paralleling the current state of Bitcoin trades, which were near $62,900 before market opening.
Bitcoin Holdings and Future Prospects
Despite this sale, Strategy retains its position as the largest corporate holder of Bitcoin. The company's Bitcoin holdings have a reported cost basis of $63.7 billion, equating to about $75,476 per coin. Recently, the company reported an $8.32 billion second-quarter loss on digital assets, with most of the decline remaining unrealized and reflective of Bitcoin's market downturn.
Strategy's BTC Monetization Program facilitates the sale of up to $1.25 billion in Bitcoin, a program that the company confirmed remains fully available as of July 5. Analyst firm Bernstein expressed that forced Bitcoin sales appear unlikely for Strategy, citing their favorable liquidity position, cash reserve coverage, and manageable near-term debt obligations.
