Strategy (MSTR) Rallies with Bitcoin. Is the Leverage Still Worth the Complexity?

Strategy Inc (NASDAQ:MSTR) rallied along with Bitcoin. The cryptocurrency rally followed a White House meeting with industry executives, while the Treasury Department's expanded bond-buyback plans lowered long-term yields and weakened the dollar.

However, Strategy Inc (NASDAQ:MSTR) is not a simple leveraged Bitcoin fund. The company held 843,775 Bitcoin on July 26, sold 1,638 Bitcoin during July 27-August 2, and another 1,690 during August 3-9, leaving 840,447 Bitcoin. That position was worth approximately $57.5 billion at Wednesday's Bitcoin price, but the figure represents gross asset value rather than value attributable to common shareholders.

Bull Case: Capital-Market Access Can Increase Bitcoin Per Share

Common issuance increases gross Bitcoin per share only when the Bitcoin acquired per incremental assumed diluted share exceeds the existing ratio. Issuing above net asset value alone is insufficient because the share denominator and use of proceeds determine the result. Strategy Inc (NASDAQ:MSTR) reported that its company-defined Bitcoin-per-share metric increased 5% during the second quarter to 210,824 satoshis.

Strategy Inc (NASDAQ:MSTR) also had a $4.80 billion reserve as of August 16, including unsettled at-the-market offering proceeds. The reserve provides a buffer for contractual debt interest and preferred dividends when declared, although the preferred series have different terms, including cumulative provisions for certain securities. This liquidity reduces near-term dependence on favorable Bitcoin or capital-market conditions.