π₯MSTR BEARS ABSOLUTELY DESTROYEDπ₯
Strategy's risk profile is simply amazing, and even in this Bitcoin market stress we are seeing the highest annual capital raising pace for them ever.
Essentially, Strategy is not only surviving the bear market, they are thriving through it and accumulating Bitcoin like nothing even happened.
I pulled Bitcoin's weekly historical price data going back to July 2010 and screen every observation where Bitcoin was within Β±5% of todayβs 4Y Moving Average multiple, meaning 1.0116Γ to 1.1181Γ the 4YMA.
That produced 34 historical weekly observations with full forward-return data.
Median forward BTC returns from this point in history:
6 months: 50%
12 months: 133%
18 months: 232%
24 months: 306%
So there is this notion out there that Strategy needs to "survive" or "run out the clock" until Bitcoin goes back up.
Given the above median forward return numbers, if history rhymes, they have nothing to worry about.
But what if they did? What if they had to continue to sell MSTR to pay the preferred dividends?
This is a non-issue IMHO. Simply scale the balance sheet down by 1,000,000x and we'll do the math from here.
They have $53,400 in Bitcoin.
They owe $1,712 per year in dividends.
Yes, this is like having a $148.35 per month dividend bill if you have $53,400 in Bitcoin.
They are raising over $130 million PER TRADING DAY this year on average. So even assuming this capital markets access is ENTIRELY SHUT OFF...
They owe $148 every month for every $53,400 of Bitcoin. And this is what the doomers are freaking out about.
Now make the assumption even more deranged.
Assume MSTRβs CEBE mNAV compresses from 1.3x to 0.8x.
At $123.97 today, that takes the stock to roughly $76.
Market cap goes from about $43.9B to about $27.0B.
So if Strategy had to pay an entire year of preferred dividends by issuing common at that nuked 0.8x CEBE mNAV level, the math is:
$1.78B annual preferred dividends / $27.0B stressed market cap = 6.6% dilution.
That is the nightmare scenario.
Bitcoin depressed. mNAV bombed. Preferred dividend still due.
Common issuance used as the emergency bridge.
One full year of payments.
About 0.55% per month.
They'd have to dilute the stock by 0.55% PER MONTH... and that is IF the premium nukes another 50% from here... AFTER this historic Bitcoin price correction.
Do you think even in this scenario, they'd survive? You know, given the median forward returns of BTC at this level?
Look at the trading volume they need to capture to pay the dividend.
Monthly MSTR dollar volume = $2.609B Γ 21 days = ~ $54.79B
Monthly dividend bill = $148.35M
Required capture = $148.35M / $54.79B = ~0.27%
If you are long on Bitcoin, you simply can not remain rational and have the cognitive dissonance that this structure doesn't work.
The bears have zero ammo.
The balance sheet is built for war.