Strategy (MSTR) has taken steps to address concerns regarding its ability to fund dividends on its various classes of preferred stock. On Monday, the company, led by Executive Chairman Michael Saylor, announced the creation of a $1.44 billion reserve aimed at ensuring sufficient liquidity for upcoming dividend payments.
The reserve was established through recent common stock sales, with the company’s immediate plan to maintain enough capital to cover at least twelve months of dividends. Strategy has ambitious plans to expand this reserve further, ultimately aiming to safeguard 24 months or more of dividend payments. CEO Phong Le confirmed that the current reserve is projected to cover 21 months of dividends, showing a commitment to financial stability despite market fluctuations.
In light of the recent downturn in bitcoin prices, which fell another 5% to approximately $86,000, Strategy has also revised its financial outlook for the year. The anticipated year-end price for bitcoin has been adjusted to a range between $85,000 and $110,000, a significant decrease from the previous expectation of $150,000. Consequently, the company’s guidance for full-year net income now ranges from a loss of $5.5 billion to a gain of $6.3 billion. Additionally, the target for bitcoin yield has been lowered from 30% to a new range of 22% to 26%, with expected bitcoin dollar gains adjusted to between $8.4 billion and $12.8 billion, down from a previous target of $20 billion.
To further enhance its bitcoin holdings, Strategy announced the acquisition of 130 new bitcoins for $11.7 million, which equates to around $89,860 per coin. This recent purchase brings the company’s total bitcoin holdings to 650,000 BTC, acquired at an average cost of approximately $74,436 per coin, totaling an investment of $48.38 billion.
Despite the strategic changes and new purchases, MSTR shares saw a decline of 4.4% in premarket trading, reflecting the broader impact of bitcoin’s price movements. Strategy’s proactive approach to managing its financial reserves and adjusting targets underlines its commitment to navigating the challenges presented by the cryptocurrency market while working to ensure shareholder interests remain a priority.