Key facts
- Strategy has adopted a new Digital Credit Capital Framework, allowing it to sell Bitcoin.
- The company can now sell up to $1.25 billion in Bitcoin to fund operations and dividends.
- Strategy authorized $2 billion in share buybacks for both common and preferred stock.
- The dividend on preferred stock was increased to 12%.
- Strategy will maintain a cash reserve equivalent to at least 12 months of dividend and interest payments.
Strategy, formerly known for its unwavering commitment to accumulating Bitcoin, has formally shifted its financial strategy. The company, led by Michael Saylor, unveiled a new Digital Credit Capital Framework that allows it to sell Bitcoin to manage its capital structure. This pivot includes a $1.25 billion Bitcoin monetization program, enabling the company to build cash reserves, fund dividends, and cover interest payments. Additionally, Strategy has authorized $2 billion in share buybacks for both its common and preferred stock, aiming to address its depressed share price. The framework also raises the dividend on its preferred stock to 12% and establishes a policy to maintain at least 12 months of dividend and interest coverage in cash, which currently stands at $2.55 billion. The company will also cease issuing common equity to purchase Bitcoin when its shares trade near the value of its holdings. CEO Phong Le described the move as a transition from primarily issuing capital to actively managing the capital structure through both issuance and repurchases, depending on market conditions. Saylor stated the framework is designed to strengthen Strategy's credit profile while maintaining Bitcoin as its primary reserve asset. Analysts noted that this move, while cheered by the market for shoring up shareholder value and credit, signifies that the largest corporate Bitcoin buyer is now also a potential seller, potentially removing a pillar of demand.