An overnight drop in the price of bitcoin combined with a tough-to-swallow capital raise sent Strategy (MSTR) shares down 12.5% to their weakest level in nearly 15 months in U.S. morning trading on Monday.
And yet, even though the price of bitcoin has not rebounded – which remained near session lows of around $85,000 throughout the day – MSTR managed to nearly erase all of its losses, ending down “only” 3.25%.
Until proven otherwise, the stock appears to be nothing more than short covering by completely satiated bears. At Strategy’s weakest level on Monday of $155.61, the stock was down nearly 40% from last month and 66% from its 2025 high reached in mid-July. Any bassist who doesn’t cover his shorts at that point is surely in the wrong business.
king dollar
Facing pressure from critics and investors about Strategy’s ability to fund preferred stock dividends, Michael Saylor and his team announced early Monday that the company had spent the past two weeks selling common stock to raise a reserve of $1.44 billion with which to pay preferred dividends over the next 21 months. The company’s goal is to have enough cash in reserve to pay dividends for a minimum of 24 months.
It was a surprising turnaround for the preeminent bitcoin treasury company, but falling bitcoin prices combined with a drop in the company’s market valuation relative to its bitcoin holdings likely left it no choice if it didn’t want to start liquidating its massive BTC stack (650,000 coins at last check).
Not very pleased with the potential dilutive effects of this new strategy, common stock investors sold heavily on the news, sending MSTR down about 12.5% in Monday’s action.
Gold fanatic and non-coiner Peter Schiff took the news as an opportunity to move forward.
“So Strategy’s new business model is to sell stock to raise cash and then use that cash to buy Treasuries yielding around 4% to finance the issuance of debt and preferred stock at a cost of 8% to 10%,” he said. “How long will investors continue to pretend that this is a viable business just to bet on Bitcoin?”
“Today is the beginning of the end of the strategy,” Schiff continued. “Saylor was forced to sell shares not to buy Bitcoin, but to buy US dollars simply to fund Strategy’s interest and dividend obligations. The shares are bankrupt. The business model is a fraud, and Michael Saylor is the biggest fraudster on Wall Street.”
Whether or not today’s reversal marks a bottom for struggling Strategy stock remains to be seen. However, the strategy’s (and bitcoin’s) battered bulls could find some solace in the dozens of other times Peter Schiff has taken a victory lap amid sector difficulties, only to see the situation completely reverse within weeks or months.
