Strategy Rises on $963 Million Bitcoin Buy, Largest Since July
TL;DR
Strategy Inc. shares rose after buying $962.7 million in Bitcoin, its largest purchase since July, while selling shares and facing a shrinking premium on its holdings amid analyst downgrades.
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Strategy Inc. shares rose as much as 2.8% in premarket trading Monday after the digital asset treasury company said it bought $962.7 million worth of Bitcoin from Dec. 1 to Dec. 7, marking its largest acquisition since July.
The Michael Saylor-founded Bitcoin treasury company acquired 10,624 tokens for an average purchase price of $90,615, below current trading levels. The firm also announced that it sold about 5.1 million common shares in the same period, for net proceeds of $928 million, and sold perpetual strife preferred stock with net proceeds of $34.9 million.
Strategy’s Bitcoin holdings are now worth more than $60 billion, but the company’s premium to its token holdings has continued to shrink. Strategy’s enterprise value at one point worth more than 2.5 times its Bitcoin holdings, but that has now fallen to a multiple of 1.1.
Amid a declining premium, the Tysons Corner, Virginia-based firm announced last week that it was creating a $1.4 billion reserve fund to cover future dividend and interest payments. Chief Executive Officer Phong Le said on a podcast in November that the company could start selling Bitcoin if its premium fell below 1.
Analysts have also lowered their expectations for Strategy. Cantor Fitzgerald cut its price target on the stock by 59% last week, while Bernstein cuts its price target by 25% on Monday. Both cited weaker Bitcoin prices, as the original cryptocurrency has fallen more than 25% from its peak in October.