Strategy (MSTR) stock has experienced a significant downturn, dropping approximately 8% last Thursday, and now trades at around $82, marking its lowest point since February 2024. The company’s preferred stock, STRC, also plummeted, hitting a record low of about $71 last week.
Despite this troubling trend, Michael Saylor, the executive chairman of Strategy, appears undeterred. He took to X on Sunday morning to share the company’s bitcoin acquisition tracker chart, accompanied by the familiar phrase, “We’re gonna need more charts.” This is a signal reminiscent of previous announcements preceding confirmed purchases on June 7 and June 21, suggesting that another filing could come as early as Monday.
Currently, Strategy holds an impressive 847,363 BTC, valued at approximately $50.8 billion. However, with bitcoin trading below $60,000, the company finds itself in a precarious position, approximately $13 billion underwater due to an average cost basis of around $75,646 per coin. Some estimates indicate that the unrealized losses could escalate to as much as $14 billion as the crypto market continues to face downward pressure.
In its latest purchase, disclosed on June 22, Strategy acquired 520 BTC for roughly $35 million, while simultaneously adding $300 million to its cash reserves, raising that total to $1.4 billion. Saylor has assured investors that the company maintains about ten months of reserves to fulfill its STRC dividend obligations.
Funding Model Under Scrutiny
The combination of declining stock prices and a discounted preferred stock has resulted in Strategy’s enterprise market net asset value (mNAV) falling below 1 for the first time. This metric indicates that the market currently values the company at less than the bitcoin it holds, complicating the ability to raise new capital through share sales.
STRC, which was designed to trade near its $100 par value, now hovers around $74.57 while carrying an annual dividend of 11.5%. A recent analysis highlighted that MSTR common stock is positioned behind approximately $6.7 billion in convertible debt and about $15.5 billion in perpetual preferred stock, indicating a leveraged residual claim rather than a straightforward bitcoin proxy.
In an unexpected turn, Strategy recorded its first BTC sale since 2022 on June 1, offloading 32 coins for around $2.5 million to cover a STRC dividend payment, before resuming its weekly purchasing strategy.
Critics Voice Concerns
The challenges facing Strategy have not gone unnoticed by industry leaders. Ripple CEO Brad Garlinghouse expressed concerns on CNBC, stating that Saylor and his team “weren’t focused on the right stuff” and suggesting that their approach has negatively impacted the broader market. He pointed to the discount on STRC as indicative of a flawed business model.
On-chain analytics firm CryptoQuant echoed these sentiments on June 23, urging Strategy to halt further purchases and prioritize rebuilding its cash reserves. Julio Moreno, head of research at CryptoQuant, noted that dividend obligations have skyrocketed to approximately $1.2 billion annually, with coverage dropping drastically from over seven years to about 14 months. They estimate that Strategy requires around $2.8 billion in reserves to restore a two-year coverage period.
As the crypto market remains volatile, Bitcoin was trading below $60,000 on Sunday, nearing its lowest level since October 2024, raising further questions about the sustainability of Strategy’s current model.
