Will Michael Saylor Do the Unthinkable? MSTR CEO Says Bitcoin Sales Are Possible
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Strategy (MSTR) CEO said the company could sell Bitcoin (BTC) as a last resort if the stock trades below its Bitcoin value.
Strategy established a $1.44B reserve using stock sales to pay preferred dividends and avoid selling Bitcoin.
Strategy revised guidance from $24B net income to potential losses of $5.5B due to Bitcoin’s 33% price drop.
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For half a decade, Strategy (NASDAQ:MSTR) — still “MicroStrategy” in every trader’s muscle memory — has lived by a simple, almost religious rule: buy Bitcoin (CRYPTO:BTC), never sell. Executive chairman Michael Saylor turned that hard-and-fast rule into a brand — a battle cry, even — and the company’s stock went up faster than the asset it was hoarding.
Strategy’s orange dots — the little markers Saylor posts on X every time he adds more Bitcoin to the pile — became a kind of crypto liturgy. There have never been any red dots. Ever. Whenever the crypto’s high priest was asked by someone about what would happen during a steep collapse in price, he declared he would simply buy more Bitcoin.
We’re in just such a downdraft now. After peaking above $126,000, Bitcoin has since lost a third of its value and Saylor has remained true to his word. Strategy’s digital asset hoard has grown to 650,000 bitcoin, 10,000 more than it held just one month ago. Yet the bitcoin treasury company just opened a door that everyone thought was forever sealed.
During a recent interview on the What Bitcoin Did podcast, Strategy CEO Phong Le was pointedly asked whether the company would ever sell any Bitcoin. Despite Saylor’s previous defiant declarations to the contrary, Le said crypto sales from its treasury were possible.
“If the stock trades below the value of our Bitcoin,” Le explained, “and we can’t raise any other capital to pay the preferred dividends, then mathematically we would have to sell some Bitcoin. It would be the last resort.”
While that is not saying Strategy will be selling Bitcoin, it finally puts the option on the table. And though there were questions about whether such sales might be happening soon considering payment of preferred options are due on Dec. 31 and Strategy’s market net asset value (mNAV) is trading close to the 1.0 threshold of market cap to Bitcoin value, many believed a forced sale could be imminent. But it doesn’t look like that’s going to happen — at least not yet.
In a filing this morning with the SEC, Strategy said it had established a USD Reserve of $1.44 billion to pay the preferred dividends due as well as the interest on the substantial debt it has acquired. The company said it had funded the reserve using proceeds from the sale of shares of class A common stock under Strategy’s at-the-market offering program.
That, of course, dilutes current shareholders and is contributing to the plunge in Strategy stock being witnessed this morning, which is down almost 11% heading into noon trading. While it takes off the table the prospects of a Bitcoin sale, it has also impacted Strategy’s guidance for the full year.
Its previous forecast was based on the unreasonable assumption that the good times would go on forever and Bitcoin would climb to $150,000 by the end of the year. Reality, though, dumped a bucket of cold water on its projections, and now Strategy is calling for Bitcoin’s price to be in a range between $85,000 and $110,000. It also means the profits Strategy was expecting could now turn into significant losses.
Previous Guidance
Current Guidance
Operating Income
$34 billion
($7 billion) to $9.5 billion
Net Income
$24 billion
($5.5 billion) to $6.3 billion
Earnings per Share
$80
($17) to $19
Source: Strategy SEC filings. Numbers in parentheses indicate losses. Table by author.
Ouch! Strategy also forecasts BTC yields of 24% at the midpoint (down from 30% previously) and BTC $ gains of $10.6 billion at the midpoint (down from $20 billion). In short, Bitcoin’s plunge is quickly unraveling Strategy’s finances.
Strategy operated on the assumption that Bitcoin’s price would only go up and that by issuing preferred stock, it had unlocked an infinite money glitch that would print it money. That’s the sort of rose-colored glasses outlook of someone who has never seen a bear market or a crypto winter, and yet Saylor is no babe in swaddling clothes; he’s been through both.
It’s always “it’s different this time” until it’s not, and the sharp, painful bite of a deep freeze digs in. Where Strategy previously enjoyed the benefits of Saylor’s endless Bitcoin hype, it is now suffering from a negative feedback loop spiraling lower. It may have temporarily taken Bitcoin sales off the table, but they could be served back up again very quickly — and could spur a selling frenzy as Bitcoin’s price plunges further.
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