Strategy’s Bitcoin per Share Falls Despite Additional BTC Purchase
Summary
- Strategy moved to make an additional Bitcoin purchase through a new common stock sale, but its Bitcoin holdings per share fell as the number of shares increased.
- Some critics said the new share issuance diluted existing shareholders and damaged shareholder value, adding that buying Bitcoin while the stock trades at 0.8 times NAV is inefficient.
- Strategy, however, pushed back, saying that a larger Bitcoin position and $1.1 billion in cash-equivalent assets have instead increased its underlying corporate value and shareholder value.
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Strategy (MSTR) bought more Bitcoin, but its Bitcoin holdings on a per-share basis fell after the company increased its share count.
CryptoSlate reported on June 15 that Strategy issued 1.7 million new common shares last week to help fund Bitcoin purchases, raising about $209 million.
The company used about $100 million of the proceeds to buy an additional 1,587 Bitcoin. It kept the remainder in cash, leaving it with $1.1 billion in cash and cash-equivalent assets.
The increase in outstanding shares, however, pushed Bitcoin holdings per share down to 12.5% on June 15 from 13% on June 1.
Some critics argue that the new stock sale diluted existing shareholders and eroded shareholder value.
They also say issuing new shares to buy Bitcoin is inefficient when the stock is trading at about 0.8 times net asset value, excluding debt.
Strategy, for its part, said the increase in its Bitcoin holdings and cash means its underlying corporate value and shareholder value have risen instead.
Debate in the market continues as Strategy presses ahead with its aggressive Bitcoin-buying strategy and investors assess how equity-funded capital raising affects existing shareholders.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
