Strategy President and CEO Phong Le has invested $1 million in the company’s STRC preferred stock, which has been trading below its intended $100 par value. In a recent post, Le stated that he plans to hold the position until the stock returns to par value and may continue holding it beyond that point. This investment is seen as a vote of confidence in the company’s stock.
Context
The purchase comes as STRC remains under pressure, with the stock recently declining below $83. However, after Le disclosed the investment, STRC recovered from session lows and rose 1.46% to $89.88. Le’s investment is significant, as STRC plays a central role in the company’s Bitcoin acquisition model. When the preferred stock trades above its $100 par value, Strategy can issue additional shares and direct the proceeds toward Bitcoin purchases.
Company Response
Strategy Executive Chairman Michael Saylor recently defended the company’s Bitcoin-backed capital model, stating that the company’s Bitcoin and cash holdings exceed its outstanding debt by roughly $48 billion. Saylor also noted that the company has raised more than $60 billion in capital since 2022 and used those funds to acquire Bitcoin. In a regulatory filing, the company reported that its U.S. dollar reserve had increased to $1.4 billion, which is intended to support the credit quality of its Digital Credit securities.
Market Concerns
Despite the company’s efforts to strengthen confidence in its balance sheet, several market participants have raised concerns about STRC and the sustainability of the broader financing strategy. Some have suggested that Strategy may eventually need to sell a significant amount of Bitcoin to reduce pressure on its capital structure and support STRC holders. Others have drawn comparisons between aspects of STRC’s structure and Terra’s former LUNA ecosystem.
Bitcoin Holdings
Strategy has continued adding to its Bitcoin position, with Saylor recently disclosing the purchase of 520 BTC for approximately $35 million. The company now holds a total of 847,363 Bitcoin. However, pressure on STRC also follows the company’s only disclosed Bitcoin sale this year, in which it sold 32 BTC for roughly $2.5 million to help fund obligations associated with STRC dividends.
Based on reporting from crypto.news.