TLDR
- Michael Saylor has revised MicroStrategy’s stock issuance rules to allow greater flexibility in Bitcoin acquisitions.
- The company will issue MSTR stock under a market-to-asset value (mNAV) of 2.5 to fund Bitcoin purchases.
- The mNAV premium that once stood at 3.4x has fallen to 1.6x, prompting the strategic shift.
- MSTR stock has struggled with performance, trading around $360, amid a decline in its premium over Bitcoin.
- Analysts suggest that MSTR stock may experience further declines if it falls below $360.
Michael Saylor, Executive Chairman of Strategy (MSTR), has reversed his position on the company’s stock issuance rules. This change comes amid the decline in the premium that MSTR stock once enjoyed over Bitcoin holdings. Saylor’s decision allows the company to issue shares under the market-to-asset value (mNAV) of 2.5, raising funds to buy more Bitcoin.
MSTR Stock Issuance Rules Eased to Fund Bitcoin Purchases
In a shift from his previous stance, Michael Saylor has eased restrictions on issuing MSTR stock to fund Bitcoin purchases. The company had previously stated that it would avoid issuing shares at a price below 2.5 times the value of its Bitcoin holdings. This “mNAV premium,” which had once been as high as 3.4x, has now fallen to 1.6x, prompting Saylor to revise his strategy.
Saylor’s new approach allows more flexibility in issuing MSTR stock to raise cash, despite the narrowing premium.
“This adjustment gives us the flexibility to respond to market conditions and fund our Bitcoin acquisitions,” said Saylor.
With the stock’s underperformance and mNAV dropping, the company seeks a new path to continue purchasing Bitcoin without relying solely on existing capital.
MSTR Stock Faces Pressure Amid Falling Premium and Volatility
Strategy’s stock has struggled in recent months, trading at around $360. Despite Bitcoin’s price hitting all-time highs, the stock’s performance has not gained traction. As a result, MSTR stock’s premium over Bitcoin holdings has continued to decrease, leading some analysts to caution about the future.
Crypto analyst Ali Martinez noted that the MSTR share price is forming a classic head-and-shoulders pattern. This technical pattern suggests that if the stock falls below $360, it could see further declines toward $300. This bearish outlook has led some investors, including Vanguard, to reduce their MSTR holdings by 10% in the second quarter of the year.
The volatility in MSTR stock has dampened retail investor interest, making it harder for the company to maintain its stock premium. As the company’s stock price stagnates, Saylor’s strategy shift marks an attempt to regain momentum. With Bitcoin prices rising, the company is focusing on flexibility to optimize its Bitcoin acquisitions and maintain its position.
