Key facts
- MicroStrategy CEO Phong Le believes the company's balance sheet is secure unless Bitcoin drops to $8,000-$10,000.
- This price range is identified as a point where debt-related risks would need consideration.
- Le emphasized the importance of increasing the U.S.-dollar reserve for the recovery of MicroStrategy's preferred stock, STRC.
- STRC, designed to maintain a $100 par, has fallen below this level, impacting MicroStrategy's ability to fund bitcoin purchases through new share issuances.
MicroStrategy CEO Phong Le stated that the company's financial strategy feels secure unless Bitcoin's price drops significantly to the $8,000-$10,000 range. In an interview with Bloomberg TV, Le indicated that this price level would prompt the company to consider risks associated with its debt.
Le highlighted that until such a drop occurs, the company feels secure about its balance sheet. He also emphasized the importance of building a capital structure that can withstand bear markets and benefit from bull cycles. A key focus is increasing the U.S.-dollar reserve to aid the recovery of MicroStrategy's preferred stock, STRC, which is designed to provide cash flow for bitcoin purchases in exchange for a regular dividend.
STRC, which aims to maintain a $100 par value, has recently traded below this level, impacting MicroStrategy's ability to issue new shares and acquire more bitcoin. Le noted that having liquid access to U.S.-dollar capital has proven important in recent months. MicroStrategy's stock (MSTR) closed down nearly 6% at $97.58 on Tuesday, reflecting a year-to-date decline of 36% and a 78% drop over the past 12 months. The company's shares are currently trading at a slight premium to its Bitcoin holdings, with an mNAV of 1.02.