TLDR
- Strategy spent $635.2 million buying back its STRC preferred stock, pulling cash away from Bitcoin purchases
- MSTR stock fell around 3% in pre-market trading following the news
- Strategy also bought 4,603 Bitcoin for $369.7 million, bringing total holdings to 845,050 BTC worth ~$65.9 billion
- Rival preferred token SATA holds its $100 target price by offering a higher 13% yield vs STRC’s 12%
- Wall Street gives MSTR a “Moderate Buy” consensus with an average price target of $236.38
Strategy (MSTR) dropped around 3% in pre-market trading after the company revealed it spent $635.2 million buying back its STRC preferred stock. MSTR was trading near $132.94 as of Tuesday.
Investors reacted negatively because the cash went toward defending STRC’s price rather than buying more Bitcoin, which is the core reason most people own the stock.
STRC is a preferred stock with a target value of $100. It currently trades near $97.34, still below that target despite Strategy setting up a $1 billion buyback fund. In its most recent move, Strategy spent $151.8 million to repurchase STRC at an average price of $97.48.
The buyback reduces the supply of STRC to push its price up. But so far, the stock remains stuck below the $100 level.
SATA Is Applying Real Pressure
A big part of the problem is competition from SATA, a rival preferred token issued by Strive. SATA pays a 13% annual dividend with daily cash payouts. STRC pays 12% twice a month. That yield difference matters, and the market has made its preference clear.
SATA holds steady at its $100 target, which lets Strive raise more capital and buy more Bitcoin. Strive stock is up 60% this year. Strategy stock is down 15%.
Strategy Returns to Buying Bitcoin
On a more positive note, Strategy ended a roughly two-month pause on Bitcoin purchases. The firm bought 4,603 BTC for $369.7 million at an average price of around $80,318 per coin. Total holdings now sit at 845,050 BTC, valued at approximately $65.9 billion.
The purchases were funded by selling around 4.53 million MSTR shares, raising $602.8 million. After covering the Bitcoin buy, STRC repurchases, dividends, and other costs, Strategy reported roughly $5.10 billion in USD reserves and $1.61 billion in cash as of August 30.
CEO Phong Le also bought 11,000 shares back in June at $90.80 per share. Executive Chairman Michael Saylor signaled the return to buying with a “We’re Back” message ahead of the filing.
Institutional interest remains strong. Public Employees Retirement System of Ohio picked up 121,962 shares worth around $10.6 million in Q2. Major names like Capital International Investors, Amundi, and Capital Research Global Investors also increased positions in Q4.
Insiders have been more mixed. A director sold 1,850 shares at $130.00 on August 27, worth $240,500. Over the last 90 days, insiders sold a total of 148,575 shares worth $17.6 million.
On the analyst side, Strategy holds a “Moderate Buy” consensus. Barclays rates it “overweight” with a $125 price target. HC Wainwright has a $325 target. TD Cowen cut its target from $400 to $260 but kept a “buy” rating. The average target across analysts sits at $236.38. Zacks remains the outlier, recently downgrading MSTR to a “strong sell.”
Strategy reported Q2 earnings of -$24.45 per share, well below the -$2.19 estimate, with revenue of $122.37 million.
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