Facing questions from critics about its ability to fund dividends on its various classes of preferred stock, Strategy (MSTR) and its CEO, Michael Saylor, announced early Monday the formation of a reserve of US$1.44 billion.
The reserve was raised through the sale of common stock last week and the company initially intends to keep enough money in the reserve to fund at least twelve months of dividends, according to a news release. The strategy also aims to increase the reserve with the ultimate goal of covering 24 months or more of dividends.
CEO Phong Le said the reserve currently covers 21 months of dividends.
New objectives
Given the reality of the recent bitcoin crash Prices (down another 5% to $86,000 on Monday morning) versus the company’s expectations of $150,000 by the end of the year, Strategy also adjusted its full-year earnings and bitcoin performance targets.
Now assuming a year-end price range of between $85,000 and $110,000, Strategy is targeting full-year net income ranging from a loss of $5.5 billion to a profit of $6.3 billion.
Bitcoin’s so-called yield target has been lowered to a range of 22%-26% from the previous target of 30%.
Bitcoin’s full-year dollar profit target has been lowered to between $8.4 billion and $12.8 billion, down from the previous target of $20 billion.
Fresh bitcoin purchases
The company also announced modest new bitcoin purchases of 130 coins for $11.7 million, or $89,860 per BTC. That brings Strategy’s stack to 650,000 BTC purchased for $48.38 billion, or $74,436 per coin.
The purchase was financed through the sale last week of 8.214 million common shares, raising $1.478 million. Most of that money went to finance the aforementioned dollar reserve.
MSTR shares fell 4.4% in pre-market trading along with the sharp drop in the price of bitcoin overnight.
