Investors Punish Firms Diluting Shares to Buy Bitcoin

On June 22 Strategy sold $335.5 million of its common stock, kept roughly $300 million in cash to raise a preferred dividend reserve to $1.4 billion and used the remainder to buy 520 Bitcoin. The company reported a diluted share count near 388.6 million and said its year-to-date BTC Yield, a metric its CEO uses to measure Bitcoin per share, fell to 11.8% from 13% a month earlier. Strategy reported holding 847,363 BTC as of June 21 and carries more than $13.5 billion of preferred equity ahead of common shareholders.

Investors are assessing not only headline Bitcoin purchases but the net effect of financings on common shareholders’ claim to corporate Bitcoin treasuries. Market participants are weighing dilution, preferred dividend obligations, debt costs and the cash companies retain when evaluating whether a new share issuance increases Bitcoin per fully diluted share.

Analysts and investors are using a measure called mNAV, the ratio of a company’s market value to the value of the Bitcoin it holds. When a stock trades above the value of its coins, management can issue equity at a premium and buy Bitcoin in a way that increases Bitcoin per share. If that premium disappears or turns into a discount, issuing new equity can transfer value to new investors at the expense of existing shareholders.

Metaplanet, the largest public corporate Bitcoin holder in Asia, reported about 40,177 BTC, worth roughly $2.4 billion, while its enterprise value has fallen below the value of those coins, giving it an mNAV of about 0.9x. The stock has fallen about 47% year to date and the company reported a quarterly BTC Yield of -0.40%. Management has paused new common-share issuance and said it will consider buybacks when mNAV drops below 1.0x.

In Europe, Capital B won shareholder approval on June 17 to raise up to €5 billion in equity and to issue up to €100 billion in credit instruments; the company currently holds about 3,139 BTC. Sweden’s BTC AB opened a rights issue for up to 195,078 Class A preference shares priced at SEK 120 apiece, a sale that would raise about SEK 23.4 million. Those preference shares pay a 10% annual dividend paid monthly; early commitments covered roughly 27% of the offer as of late June and the subscription window closed June 30.

The arrival of spot Bitcoin ETFs changed the context for corporate treasuries by offering direct, lower-cost exposure to Bitcoin. Some market participants say those ETFs reduce the relative scarcity value of holding Bitcoin through a public company and have increased scrutiny of financing terms.

When a treasury company cannot issue stock above net asset value but still owes preferred dividends and debt coupons, options include issuing equity at a discount, lending coins to generate yield or selling assets to meet obligations. Strategy has publicly explored lending some of its Bitcoin holdings, which would introduce lending-related risks to its balance sheet.

Market participants are increasingly tracking Bitcoin per fully diluted share as a primary performance metric for corporate Bitcoin holders. Financing plans are being judged on whether they expand common shareholders’ claims on corporate Bitcoin treasuries after accounting for dilution and other layers of capital.