Strategy, previously known as MicroStrategy, has made headlines with its recent purchase of 13,390 bitcoins between May 5 and 11, each at an average cost of $99,856, thus adding $1.34 billion in Bitcoin to its holdings. This new addition boosts the firm’s total Bitcoin ownership to 568,840 BTC, valued at over $59 billion. Although the average acquisition cost persists at $69,287, the company enjoys paper gains nearing $20 billion. Their current holdings represent 2.7% of the total Bitcoin supply, a significant feat achieved by amassing 303,230 BTC within the last six months.
How Does Strategy Fund Its Expansive Bitcoin Purchases?
The firm secured funding for its latest Bitcoin buy by issuing common stock (MSTR) and preferred shares dubbed STRK. Recently, Strategy sold 3.22 million MSTR shares, garnering $1.31 billion in proceeds, with an authorization to issue more stock worth $19.69 billion still intact. Through STRK shares, an additional $25.1 million was raised, and an ample $20.85 billion limit remains for further sales.
The ambitious “42/42” strategy aims to raise $84 billion by 2027 to invest in Bitcoin. Initially set at $42 billion, this plan has now doubled. Chairman Michael Saylor hinted at upcoming developments, urging stakeholders to “connect the dots.” A week ago, Strategy acquired 1,895 BTC with a $180 million investment, bringing their Bitcoin total to 555,450 BTC.
How Do Other Companies Compare?
At least 70 publicly traded companies have adopted similar Bitcoin treasury approaches, with major operators like Cantor Fitzgerald and SoftBank joining the competition through their $3.6 billion scheme, Twenty One. Analysts from Bernstein forecast a potential inflow of $330 billion into institutional Bitcoin portfolios in the next five years.
Strategy’s market capitalization, at $113.7 billion, nearly doubles the net value of its Bitcoin assets. According to K33 analysis, the high stock premium that persisted since 2024 despite over $15 billion in dilution uniquely positions the company for future strategic purchases.
The company’s low leverage and no imminent debt payments until 2028 mean that financial risks remain minimal for now. Benchmark analysts recently upheld a “buy” recommendation for MSTR stocks with a target price of $650, while Bernstein maintained an “outperform” rating with a $600 target.
Key takeaways from Strategy’s actions and market position include:
- Substantial Bitcoin reserves valued over $59 billion.
- Innovative funding through stock sales.
- Strategic risk management with limited debt obligations.
- Significant institutional interest potential over the coming years.
These determined strategies and financial maneuvers indicate that Strategy is deeply committed to its Bitcoin-centric goals. Their model of aggressive accumulation through innovative funding highlights a distinctive approach within the broader institutional landscape, showcasing a formidable strategy in leveraging and benefiting from the cryptocurrency market.
