The decrease of the Tesla cash treasuring to the marginal count, strategy (ticker MSTR), a notoriously risky play in the field of technology, third quarter earnings registered a decrease to just over $2.8 billion from a record-breaking $10 billion in the previous quarter. The result was the waning of the bitcoin rally that had been going on in late summer and the continued narrowing of the company’s valuation premium. However, the profit still surpassed analyst forecasts, with diluted earnings per share of $8.42, which is higher than the predicted $8.15.
On Wednesday, Strategy’s shares were trading at about $254, their lowest value in more than half a year. They moved up by nearly 4% in the after-hours session following the announcement. Bitcoin was valued at just below $107,000, which is approximately 15% lower than the record set in early October. The declining momentum has deterred investors from buying Strategy’s bitcoin-related stock, whose price has been highly correlated with that of the cryptocurrency.
The mNAV multiple of the enterprise, which is the ratio of the company’s market value to its bitcoin reserves, went down to nearly 1.2×, thus it was at the lowest level of the period since March 2023. A drastic drop is noticeable from as far back as last November, when the mNAV hit 3.9× at the time of Donald Trump’s election victory, and a sudden rise of bitcoin to almost $100,000 leading to a skyrocket in Strategy’s valuation.
Despite the fact that Strategy is still the one with the largest corporate bitcoin stash, it was able to add roughly 43,000 BTC in the third quarter alone. Consequently, the total amount of Bitcoins held stands at 640,808 BTC, which at the moment is worth a bit less than $69 billion based on the current market prices, as per SaylorTracker. The rate of buying has dropped from 69,000 BTC in Q2 and more than 80,000 BTC in Q1, as lower premiums have made it less profitable for the company to issue new shares.
The Strategy has increased the dividend on its STRC preferred stock to 10.5% for November from 10.25% in the previous month in order to keep investor interest. These preferred instruments—branded under the tickers STRC, STRF, STRK, and STRD—are still the main tool for the company to raise funds, thus it can continue to do the bitcoin buying program without issuing additional common shares.
It was mentioned by the company that these high-yield instruments are still very attractive to investors despite the tightening of the premiums and the payouts are mostly funded through ongoing preferred and equity issuances rather than cash flow. This arrangement allows Strategy to continue accumulating bitcoin even if the market is cooling and valuation multiples are declining.
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