Michael Saylor’s MSTR Boosts Funds for Preferred Dividends

Michael Saylor’s Strategy (MSTR) is taking significant steps to assure its financial stability regarding preferred dividends. On Monday, the company announced the creation of a $1.44 billion reserve. This decision follows scrutiny from critics questioning the company’s ability to sustain dividend payments.

MSTR’s Strategy for Preferred Dividends

The reserve was established through the recent sales of common stock. This move is aimed at securing enough funds to cover at least twelve months’ worth of preferred dividends. Strategy plans to enhance this reserve, with an ultimate goal of supporting 24 months or more of dividends. Currently, the reserve is projected to cover 21 months of dividends, according to CEO Phong Le.

Financial Adjustments Amidst Bitcoin Plunge

With bitcoin prices in decline, Strategy has adjusted its financial outlook. As of Monday morning, bitcoin was priced at $85,645.09, a drop of approximately 5%. This decline contrasts with the company’s earlier expectations of a year-end bitcoin value of $150,000.

To align with the changing market conditions, MSTR has revised its profit and yield targets:

• Projected full-year net income: Loss from $5.5 billion to a gain of $6.3 billion.
• Bitcoin yield target: Adjusted to 22%-26%, down from the previous 30%.
• Bitcoin dollar gain target: Now forecasted between $8.4 billion and $12.8 billion, reduced from $20 billion.

Recent Bitcoin Purchases and Share Sales

In addition to adjusting its targets, MSTR also made new bitcoin purchases. The company acquired 130 bitcoins for $11.7 million, averaging $89,860 per BTC. This new acquisition brings MSTR’s total bitcoin holdings to 650,000, acquired for a total of $48.38 billion, averaging $74,436 per coin.

The funding for this recent bitcoin purchase was generated from the sale of 8.214 million shares of common stock, raising $1.478 billion. Most of these funds were utilized to bolster the dollar reserve.

In light of these developments, MSTR shares experienced a 4.4% decline in premarket trading, reflecting the overall drop in bitcoin prices. The market remains vigilant as MSTR navigates these challenges while aiming to reinforce its financial position.