Strategy Inc. returned to profitability for the first time in four quarters after registering a $21 billion unrealized gain from its Bitcoin holdings during the third quarter’s cryptocurrency rally. Bitcoin rose 43% in Q3, driving the gain under accounting rules requiring fair value changes to flow through earnings. Despite the rebound, the company faces waning demand for its securities as investors seek Bitcoin exposure without direct ownership.
To address shareholder concerns about dilution, Strategy has scaled back common stock sales and spent over $1 billion buying back its preferred shares, particularly the STRC series. The firm switched STRC dividend payments from semi-monthly to daily to improve liquidity and reduce volatility, a move endorsed by co-founder and executive chairman Michael Saylor. Strategy has issued four US-listed preferred share series to fund Bitcoin purchases without diluting common shareholders, though these carry high dividend costs.
The company recently resumed Bitcoin purchases while selling both common and preferred shares amid a Bitcoin price respite. It bought $28.7 million of Bitcoin from Oct. 1–4 and repurchased $176 million of STRC preferred shares. Strategy holds 848,000 Bitcoin valued at around $73 billion.
Its common shares have fallen over 50% in the past year, while Bitcoin is down ~30% over the same period. STRC preferred shares have traded below face value since May.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing