Tysons Corner-based firm Strategy has shaken the crypto and stock markets once again, revealing a whopping $450 million Bitcoin purchase funded largely through stock issuance. As of now, the company—led by Executive Chairman Michael Saylor—holds approximately 636,500 Bitcoins, valued at over $70 billion. This aggressive move brings Strategy closer than ever to S&P 500 inclusion, and could redefine how public companies leverage crypto for capital growth.
The announcement marks a critical inflection point not just for the firm, but for how institutional investors could approach crypto going forward. With tactical use of share issuance and strong backing from investment analysts at Benchmark, Strategy’s pivot may signal a new model for corporate crypto accumulation.
Strategy’s bold Bitcoin move reinforces long-term vision
Strategy’s recent $450 million Bitcoin acquisition aligns with its long-standing institutional accumulation model that started back in 2020. Unlike casual purchases, this one was decisively funded through stock issuance—$425 million in common shares and $46.5 million in preferred shares—signaling a deliberate shift in how the company finances its Bitcoin portfolio.
This was not a spur-of-the-moment decision. The firm amended its own policies that previously restrained when it could issue shares based on the mNAV (multiple-to-net asset value) premium on its Bitcoin holdings. By loosening this constraint, Strategy allowed itself the flexibility to capitalize on market efficiencies and respond swiftly to evolving demand.
Michael Saylor and the iterative Bitcoin playbook
Under the strategic leadership of Michael Saylor—a longtime Bitcoin advocate—Strategy’s playbook has taken form as opportunistic and iterative. Saylor, co-founder and Executive Chairman, has been instrumental in positioning Bitcoin not just as a store of value, but as a corporate treasury asset.
This latest change allows the firm to issue shares “when otherwise deemed advantageous,” as Benchmark analysts interpret it. According to them, it’s not a sign of desperation or dilution, but a systemic evolution aimed at maintaining buying power while adapting to market swings—a necessary pivot as mNAV compression has put pressure on capital access.
Share issuance allows strategic Bitcoin funding
The genius of this approach lies in converting share issuance into direct Bitcoin purchasing power. While issuing new shares can usually worry investors, in this case, it addresses dual needs: maintaining Bitcoin acquisition velocity and preserving capital flexibility.
Benchmark, a respected investment bank covering Strategy, reiterated its “Buy” rating for the company’s stock alongside a bullish $705 price target. This reinforces investor confidence that Strategy’s use of share issuance remains aligned with shareholder and strategic value generation, especially with the Bitcoin holdings acting as a pseudo-treasury reserve.
In total, the Bitcoin-buying spree is not just a financial move; it’s a philosophical one—embracing harder assets amid a growing distrust of fiat systems among institutional investors.
Anticipated S&P 500 inclusion drives institutional momentum
Another potential game-changer: S&P 500 inclusion. A decision on this is expected soon, possibly by Friday. Strategy’s aggressive Bitcoin accumulation and modern funding tactics via stock issuance make it a compelling candidate for the index.
Inclusion in the S&P 500 could significantly increase passive investor demand due to index-tracking funds needing to purchase the stock. This would heighten visibility and widen the shareholder base—creating a virtuous cycle benefiting both Strategy’s stock and Bitcoin’s adoption narrative.
Michael Saylor has referred to the company’s expanding Bitcoin position and capital policy as being fine-tuned for global exposure, and this potential gateway into the S&P 500 circles back to that logic. A publicly traded Bitcoin-rich firm in the most-watched stock index would set a legacy-level precedent.
Benchmark analysts back the corporate crypto thesis
Benchmark’s endorsement of Strategy’s move is more than a formality—it echoes a broader sentiment among institutional investors. The firm’s analysts describe the revised share issuance approach as a front-line measure in response to premium compression issues that hindered funding rounds in earlier cycles.
Their support of Strategy’s $705 target matches the bullish outlook on further Bitcoin appreciation and growing adoption among corporates. It’s no longer just about how much Bitcoin Strategy holds, but also how flexibly and tactically it can continue growing that stash with minimal friction.
This institutional validation could influence other publicly traded companies reconsidering how Treasury operations might include digital assets like Bitcoin.
What makes this Bitcoin buy different?
Several aspects set this $450 million buy apart from previous crypto purchases by Strategy:
- It’s their largest since early bull runs, showing revived confidence.
- It aligns with a corporate policy shift aimed at easing capital access, not speculative trend-following.
- The buy comes at a strategic moment when S&P 500 inclusion could dramatically shift visibility and market behavior around Strategy’s stock.
In short, this wasn’t just a Bitcoin acquisition—it was a methodical move intended to amplify both market positioning and investor engagement.
Frequently asked questions about Strategy buys Bitcoin (FAQ)
How did Strategy fund its latest Bitcoin purchase?
Strategy funded the $450 million Bitcoin purchase primarily through stock issuance—about $425 million in common shares and $46.5 million in preferred shares.
Why did Strategy change its share issuance policy?
The company modified its share issuance policy to avoid restricting access to capital during times when its stock was trading close to book value. This allows more tactical funding and purchasing flexibility.
How much Bitcoin does Strategy currently hold?
Strategy now owns approximately 636,500 Bitcoins, valued at over $70 billion as of recent market prices.
Who is leading Strategy’s Bitcoin investment approach?
Michael Saylor, Executive Chairman and co-founder, spearheads the firm’s long-term vision of using Bitcoin as a strategic corporate treasury asset.
What impact could S&P 500 inclusion have on Strategy?
If included, Strategy would likely see increased institutional and passive investor demand, amplifying stock liquidity and visibility while reinforcing its role as a “Bitcoin treasury” model.
Sources to this article
Benchmark Investment Bank (2024) Saylor’s corporate strategy in the crypto economy. Available at: https://benchmark.com/reports-strategy-bitcoin-playbook [Accessed 2 Jun. 2024].
Yahoo Finance (2024) Strategy stock quote and S&P 500 news. Available at: https://finance.yahoo.com/quote/STRGY [Accessed 2 Jun. 2024].
