Strategy continues to increase its Bitcoin holdings, now totaling over 506,137 BTC, raising questions about the sustainability of such investments amid price fluctuations.
Current Position and Company Strategy
Currently, Strategy has invested heavily in Bitcoin, despite its price having retreated from all-time highs. The firm's average acquisition price has risen to $66,000, and it continues to rely on equity sales and convertible notes to finance purchases.
Analysis: Thompson's View on Strategy's Future
Quincy Thompson, founder of the Lekker Capital hedge fund, argues that the company is unlikely to be forced to sell its BTC holdings to provide additional collateral to lenders in the event of a price drop. He suggests that Strategy could refinance through convertible notes and isn't obligated to make immediate payments on preferred stock.
Financial Obligations and Possible Solutions
The company is also tasked with paying dividends on its stock and interest on its bonds, while its software business yields little profit. Thompson believes Strategy might resort to issuing more MSTR stock to cover payouts, though this could impact share value.
Strategy must tread carefully with stock issuance and asset management to avoid financial pitfalls. Amid growing obligations and market volatility, the firm needs to balance share issuance with financial stability.
