Saylor Rebuts Shareholder Dilution Criticism, Says Cash and Bitcoin Raises Strengthen Strategy Assets

Michael Saylor, chairman of Strategy, pushed back against concerns that the company’s stock sales dilute shareholder value, arguing that raising cash and Bitcoin through new share issuance strengthens corporate assets.

CoinTurk News reported on June 11 that Saylor addressed Strategy’s capital-raising strategy, convertible debt and the debate over shareholder dilution during a conversation with Strike Chief Executive Officer Jack Mallers at the BTC Prague event in Prague, Czech Republic.

The discussion centered on how Strategy is valued and how investors assess its capital structure. Mallers asked about the mNAV metric, which investors use as a multiple of market value to net asset value, and how convertible notes should be reflected in that calculation.

Strategy has about $6.7 billion of convertible debt. With the company’s stock trading at around $115, a large share of those notes is not currently likely to convert into equity.

Saylor said mNAV is just one of several metrics used to value a company. Asset-value analysis can vary depending on whether common stock, preferred stock and convertible debt are included or excluded, he said.

He also directly rejected criticism that the company’s fundraising strategy dilutes existing shareholders. When Mallers asked what would count as true dilution if issuing new shares for cash does not, Saylor said he does not accept the premise that stock issuance itself should be viewed as dilution.

“If you issue stock and receive cash or Bitcoin in return, that is not inherently dilution,” Saylor said. “It strengthens the company’s balance sheet, expands equity capital and improves creditworthiness.”

Raising capital to secure cash or Bitcoin increases the company’s assets, he added, meaning shareholders receive tangible assets in return.

Saylor also said Strategy’s dollar reserves have recently climbed to about $1 billion. He argued the company’s financial position could strengthen further as long as debt and preferred stock remain a limited portion of total assets.