Strategy stock rises as company may sell Bitcoin to fund buybacks

Strategy (ticker: MSTR) shares rose after the company introduced a Digital Credit Capital Framework and authorized up to $2 billion in repurchases aimed at bolstering its capital structure. In early trading the common stock climbed about 3.9% to $85.52 and the Variable Rate Series A Perpetual Stretch Preferred Stock (STRC) moved toward $81.

The framework allows limited Bitcoin sales to build a U.S. dollar reserve, to fund or replenish cash used for preferred dividends and interest, and to finance repurchases of its preferred securities or common stock. The authorization does not require any Bitcoin sales; decisions would depend on market conditions, tax, legal and accounting considerations and the company’s assessment of shareholder value.

As of June 28, Strategy held 847,363 Bitcoin, with a market value of about $50.7 billion and an unrealized loss of more than $13 billion versus disclosed acquisition costs. The company reported a U.S. dollar reserve of about $2.55 billion on June 28, including expected proceeds from shares sold through an at-the-market offering that had not yet settled.

Based on current annual preferred dividend payments and interest expense of roughly $1.76 billion, Strategy said the dollar reserve provides coverage of about 17.4 months. The board adopted a policy requiring a minimum reserve equal to at least 12 months of expected preferred dividends and interest; any drop below that level would need board approval. The company also has $1.25 billion of board-authorized Bitcoin monetization capacity that can be deployed to build or replenish the cash reserve.

Combined with the existing dollar reserve, Strategy said it has roughly $3.8 billion of liquidity coverage for preferred dividends and interest expense, equal to about 25.9 months of coverage before accounting for repurchases, taxes, transaction costs, market conditions or changes in dividend rates.

The board raised the annual dividend on STRC to 12% from 11.5%, effective for semi-monthly periods with record dates on or after July 1. The company will review the STRC dividend rate monthly using factors that include the security’s trading level, market yields, credit spreads, Bitcoin price and volatility, reserve coverage and broader capital market conditions. Dividend payments remain subject to board approval and are not guaranteed.

The board authorized up to $1 billion in repurchases of its Digital Credit Securities, including STRC, STRF, STRD and STRK, and a separate $1 billion repurchase program for Class A common stock. Repurchases may occur through open-market purchases, block trades, tender offers, exchange offers or privately negotiated transactions. Strategy said neither preferred nor common buybacks will be funded from the dollar reserve; if funded by Bitcoin sales, such transactions would fall under the Bitcoin monetization program.

Chief Executive Officer Phong Le stated the company will shift between issuing securities when capital is attractive and repurchasing securities when instruments trade at levels that make buybacks accretive. Executive Chairman Michael Saylor reiterated that Strategy remains committed to Bitcoin as its primary treasury reserve asset while noting the Digital Credit program requires liquidity, discipline and active capital management.

The framework formalizes a change from a model that relied heavily on issuing equity and preferred securities to accumulate Bitcoin toward one that can use cash reserves, targeted Bitcoin sales and buybacks to manage liabilities created by prior capital raises. The company previously sold 32 Bitcoin for about $2.5 million in late May, the second reported sale in its history.

Quinn Thompson, chief investment officer at Lekker Capital, called the decision to channel recent equity offering proceeds into a defensive cash reserve positive for institutional confidence but questioned whether a 50-basis-point dividend increase alone would return STRC to its stated $99–$100 level.