Michael Saylor Says Strategy's Current Capital Structure 'Bulletproof' Compared To 2022 Crypto Winter, Asserts Company Can Weather 80% Bitcoin Crash

Strategy Inc. MSTR CEO Michael Saylor expressed confidence in his company’s Bitcoin BTC/USD buying approach Thursday, asserting that it could endure an 80% drawdown and remain resilient even in a bear market.

What Happened: During the company’s second-quarter earnings call, Saylor was asked about the company’s ability to weather Bitcoin bear markets and the potential impact on its capital structure.

“I think that our structure is smooth, and we wouldn't miss a single dividend payment on an 80% drawdown,” Saylor responded. “On a 90% to 95% drawdown, in theory, you might suspend something for a little bit of time.”

Saylor cited the company’s pivot to a “robust antifragile” perpetual preferred stock strategy, which has no maturity date and retains the initial capital invested.

He pointed out that the company had previously survived an 80% Bitcoin pullback during the 2022 cryptocurrency winter with a weaker capital structure, dominated by convertible debt, and that the current structure is “bulletproof” in comparison.

See Also: Peter Schiff Says Bitcoin Is Like Tech Stocks But Without ‘Potential Of Earnings’ As Investors Digest Meta, Microsoft Numbers

Why It Matters: Strategy has spearheaded Bitcoin's corporate adoption, building its reserve with proceeds from common stock, preferred stock, and convertible bond issuances.

The approach monetizes the volatility of the company’s shares. When Strategy’s stock trades at a premium to the value of its Bitcoin holdings, the company issues new shares and uses the proceeds to purchase more BTC.

In July, it completed a $2.52 billion initial public offering of its STRC preferred stock and used the proceeds to purchase 21,021 BTC. The firm held a stash of more than 628,791 BTC, worth over $72 billion as of this writing, according to bitcointreasuries.net

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However, the approach has faced criticism, with veteran short seller Jim Chanos suggesting that the stock's premium over Bitcoin's value is not justified. Chanos has adopted an arbitrage trade that involves shorting Strategy's stock while buying Bitcoin.

Strategy reported its second-quarter financials after Thursday’s market close, with revenue exceeding analysts’ expectations. The company reported a Bitcoin gain of 88,109 in the quarter, bringing its Bitcoin gain up to 111,894 year-to-date

Price Action: At the time of writing, BTC was exchanging hands at $115,577.50, down 2.48% in the last 24 hours, according to data from Benzinga Pro.

Shares of MSTR dipped 1.41% in after-hours trading after closing 1.73% higher at $401.86 during Thursday’s regular trading session.

MSTR demonstrated a very high momentum score—a measure of the stock’s relative strength based on its price movement patterns and volatility over multiple timeframes—as of this writing. To find out how MSTR compares against other cryptocurrency-related stocks, visit Benzinga Edge Stock Rankings.