Strategy ($MSTR) Balance Sheet Update

本站添加: 2026-06-01

[00:00:00]We'll direct your attention to this column. Uh this column is as of today 527 20226 and we'll shrink this up a little bit. So Bitcoin held $843,000.

[00:00:11]Bitcoin price 74,000 uh MSTR price about 155. So assets held on the balance sheet 63 billion. Compared to the beginning of the year they had 673,000 Bitcoin and their assets were valued at $61 billion.

[00:00:26]So despite the price of Bitcoin going down 18% year-to date, the assets held on the balance sheet have actually increased 3%. Uh the USD reserve has reduced by 61%. They used cash to retire uh 1 and a.5 billion of notional convertible debt on the balance sheet.

[00:00:45]Uh the debt you see has increased about 18%. That's the reduction of the convert. The preferred stock has gone from 7.9 billion on the balance sheet to 15.4 billion. STRC has been a smashing success that's continuing to grow. So the net capital held on the balance sheet once you factor in all these different things is around 57 million 57 billion. That's the assets less the debt. Uh and the annual dividend obligation has gone to $1.7 billion. So what does that look like? Uh that's 34 years of dividends. Strategy has 34 years of dividend coverage on their balance sheet already. Again, I I think it's helpful to compare uh that relativity to everything else that's in the marketplace. The debt to asset ratio is dropping because they retired $ 1.5 billion of converts. The debt to asset ratio has gone from 9.7 to 9.2. This is the leverage percentage and the total amplification has actually increased from 25% to 35% uh year to date. So, thinking about what what needs to happen, what needs to be true for the assets on the balance sheet to be worth less than the debt. Uh that number is $7,957.

[00:01:53]Basically, the price of Bitcoin is to go down to $7,957 for the assets to be worth less than the debt on the balance sheet. That is an 89% decline from where we're at today.

[00:02:06]So it's a a massive that would require a massive uh decline in the value of the Bitcoin in order for uh plus a duration in order for there to be any stress on on the balance sheet. Now the reason I I've got several other columns here is because I wanted to compare this to 11:15 2022.

[00:02:26]So 11:15 2022 this is the depths of the bare market. So this is uh FTX, Celsius, BlockFi, etc. And at that point in time, Strategy had $130,000 Bitcoin that was valued at $2.1 billion. They had zero USD reserve. And the amount of debt that they had on the balance sheet was $2.7 billion. So they actually had $648 million less uh in assets than they did debt on the balance sheet. Again, why do we bring that up? Because the health of the balance sheet is in a significantly different place today than it was back in November of 2022. In November of 2022, the balance sheet, they had 130% leverage ratio. Today, they have a 9.2% leverage ratio. They are in a fundamentally different spot. The balance sheet has gotten incredibly healthy over time despite uh, you know, issuing preferred stock and now having dividend obligations. Again, thinking about the relativity of the dividend obligation relative to the assets that they have on the balance sheet, they've got 34 years of net capital coverage already existing on their balance sheet.

[00:03:27]So I I think it's just really helpful to look at it from this lens that there's still for some reason people that are uh very bearish on the health of the balance sheet when in reality they aren't necessarily u comparing how it's changed over time and looking at different periods and thinking about the mathematical construction of the balance sheet. So since November 2022, the Bitcoin held on balance sheet has gone up about 550%. the assets, so including the value of the increase in the Bitcoin has gone up 2,846% uh and the leverage ratios have improved drastically. A couple other things I wanted to point out is that from November 15, 2022 to January 1st, 2024, strategy went from 130,000 Bitcoin to 189,000 Bitcoin.

[00:04:14]Uh so they increased about 59,000 Bitcoin. And in the last five months, year to date 2026, strategy has increased. What is that number? That's uh 169,000 Bitcoin in the last 5 months. So they've increased by 169,000 Bitcoin.

[00:04:35]They only had 189,000 Bitcoin in January of 2024. This train isn't stopping. The balance sheet is incredibly healthy.

[00:04:42]Last thing I'll I'll bring up here is uh the Okay, what if the balance what if the price of Bitcoin were to drop 50% from here, right? A lot of bears are calling for 40,000 Bitcoin and 50,000 Bitcoin uh for some reason. And so I wanted to look at it and stress test it.

[00:04:59]So, if the price of Bitcoin fell 50% from here to $37,450, that would be 39% below the 200E moving average of $61,500, which has never happened in Bitcoin's history. The price of Bitcoin has never fallen 39% below the 200E moving average. Not to say it couldn't, but I think the uh the likelihood is incredibly unlikely.

[00:05:22]Uh at that point in time, strategy, we have $31 billion of assets on the balance sheet. the preferred stock, they'd have $15 billion. The debt, they'd have $6.7 billion. They would still have 16 years of net capital uh for dividend coverage on their balance sheet. And the leverage ratio would then go to 18.5%.

[00:05:42]Which again, compared to where we're at, where strategy was at in 2022 of 130%, it's a fundamentally different story uh on the balance sheet today than back then in 2022. So, I'll pause there. You guys have any other context you want to you want to add here? I think these are it's helpful context when thinking about the con mathematical risk profile or the construction of the balance sheet.

[00:06:06]>> Yeah, I mean we can talk about the uh repurchase last week of the $ 1.5 billion of debt which is half I think the 2029 convertible notes. I got the year wrong, but what was the what's the expiration on those guys?

[00:06:18]>> Oh yeah, it's uh they're 2029, but they've got a put date. So let's let's jump into >> yeah 2029 with a year year before put date. Uh what that does is significantly reduces any sort of obviously financial leverage on the balance sheet with retaining amplification. And I think um when looking from a risk perspective you know I talk a lot about the amplification being a potential risk for the common equity. Risk being increased volatility for the common equity.

[00:06:47]Obviously there's no default margin claw margin call call back provision on preferred equity but there is uh well the convertible debt was nonsecured so it already was a very robust balance sheet but now considering that debt never comes to due right there's uh no real refinancing risk associated with you know $ 1.5 million less of outstanding liabilities. So there's as strategy continues to decrease the actual debt burden on the balance sheet the risk profile of the debt um significantly of sorry the risk profile of the fixed income that being the preferred and the debt uh decreases significantly. Furthermore you get further seniority in the capital structure. So when you remove $ 1.5 billion of senior liabilities to the preferred equity, the strength or the overcolateralization, the Bitcoin rating of the preferred equity increases by that same $1.5 billion um immediately. And you know, we're not really seeing that strength reflected in the trading prices of STRF, STRD, and STRK and STRC. But I think over time once people realize there's nothing senior to STRF, you know, some of the preferred equities will be viewed differently by the market. STRF being, you know, 40 times overcalized by Bitcoin once they're done with this retiring of the convert campaign.

[00:08:11]>> Yeah, I I think this was a this is a very uh very thoughtful decision by strategy. So, if you look here, you've got the the convert that they elected to retire was the convert with a $672 conversion price. So it had the highest conversion price out of any of the other converts. It also had the highest notional outstanding. So prior to retiring, they had $3 billion of notional outstanding. So it was the biggest uh and highest conversion effectively. It was the lowest probability of converting into actual shares and the highest probability of having to uh pay back the notional outstanding. So, when you're thinking about credit profile, uh, you want to think about the conversion price and having to pay the pay back the notional at a future point in time. Now, strategy, they've got several different things that they could do here, right?

[00:08:59]They they had uh they had cash on the balance sheet. They had two and a quart billion dollars of cash on the balance sheet, and they elected to use the 1.5 1.38 billion of cash to retire $ 1.5 billion of uh the notional convert. uh at any point time in the future they could uh they could refinance these. You can go get straight debt. You can exchange this with with preferred equity. You can uh go issue another convertible bond which they've you know said that they aren't going to do but that that market is wide open uh for wide open for business. So uh ultimately I I think this was very credit positive to your point Dan. It shifts everything else more senior. So all the preferred equities technically shift more senior. It's it's been interesting watching the price action of STRC over the last couple of days. Uh I think what as of today it closed at 9914 relatively low volume compared to uh the the 5 to 10 trading days prior to the record date over the last month. So the actual VWOP calculation of STRC hasn't changed drastically. I don't know if you guys have been watching this the one month VWOP.

[00:10:08]So, Strategy said they will only or they will increase the dividend if the one-mon VWAP of STRC falls below $99.

[00:10:19]And what what that's trying to emphasize is uh volume weighted average price. So, it's that how much is trading at a price of within the target range between 99 and 101. And at the last record date, there was significant volume. it was, you know, hundreds of millions of dollars of volume right at the record date of people that are coming in the door to scalp the dividend. And so we saw that and then the volumes traded tailed off after the record date, which is what we've seen over the last few months. But the relative volume compared to the price on a on a weighted basis actually hasn't drag dragged down the VWOP very much. So the uh one month VWOP hasn't changed much. So theoretically, strategy will maintain the 11 and a half% dividend rate because the because the relative VWAP hasn't changed. Now they always have flexibility to change that or increase the dividend if they need to. Um however, I think we're just in a little bit of a lull within the market uh in terms of you know the fixed income instruments and the relative volume.

[00:11:26]>> Yeah. Yeah, to Dan's point about it improving the um you know the capital structure, I was I was thinking that they would I mean they said they were going to do it, so that wasn't surprising, but I was like shocked and pleasantly surprised that they used the cash reserves. Um I was kind of hoping they would use the reserves to pay some dividends just to kind of like prove that I can, you know, like when they came out and said, "Yeah, we could sell Bitcoin if we had, you know, if we wanted to." Um just just to kind of say, "Look, we got cash reserves for a reason." and you know maybe pay some dividends but um to use them this way was even better. Um and I didn't think they would do it because I thought oh well the the USD reserves is what guarantees and and gives the the press you know a more solid um credit rating but the fact that they're removing something that's above them in the stack was you know they must have said that that was um I guess uh more positive than than negative. So, um I'm glad they did it this way and I was kind of surprised uh but in a good way.

[00:12:32]>> Yeah, I I think the market is is trying to figure it out, right? Uh they put the cash reserve in place to bolster bolster the view of the preferred stock. So, you know, in watching the price action the last couple days, I'm curious to see if that's um you know, people that are spooked about the credit quality because of uh the cash reserve. I mean, personally, I'm not spooked by the cash reserve because of the strength of the underlying balance sheet, all of the Bitcoin that they hold.

[00:12:57]>> Um, and just the the relative construction here, but it is it is that psychological variable of like first line of resistance.

[00:13:06]>> And so, the fact that it it has been reduced, it is a um a psychological credit element. And you have to weigh like that the value of that 1.38 billion in the USD reserve relative to a senior a senior claim right with with a a uh notional cliff maturity at a future point in time. So um just an interesting costbenefit analysis I think ultimately that will that will help in the long run. Uh especially you start to think about the relativity of some of these other debt instruments. uh the $672 conversion price uh is a little bit rich relative to where the price of the stock is trading right now, right? Uh $155. That's a a six 5x from here uh up to $672. So it was the furthest out of the money. Uh again, thinking about lowest probability of converting into uh converting into equity shares, but ultimately this does reduce the uh diluted shares outstanding as well. So thinking about this was BTC BTC per share positive which is another interesting comparison thinking about that was was a valuable uh BTC per share move uh for the common equity as well.