Strategy Stock Is Falling. It Bought More Bitcoin Anyway. — Barrons.com
By Mackenzie TatananniStrategy is sticking with what it does best, buying Bitcoin, as cryptocurrency prices fall and investors question its business model.In a Form 8-K filed with the Securities and Exchange Commission on Monday, the company disclosed it had snapped up 8,178 Bitcoins for an average price of $102,171 each, or around $835.6 million in total, in the period between Nov. 10 and Sunday. This brings Strategy's Bitcoin hoard to 649,870 tokens.According to a social media post from co-founder and chairman Michael Saylor on Nov. 14, the purchases occurred every day last week. Prices of the cryptocurrency have whipsawed after falling below $100,000 in early November.As of Monday morning, Bitcoin was down 0.5% over the past 24 hours to $93,603, placing the value of Strategy's holdings at around $60.8 billion. Strategy, meanwhile, fell 3.1% to $193.62. The stock has slumped more than 33% this year.Last week, investment manager Jim Chanos ignited a discussion over Strategy's market multiple of net asset value (mNAV), saying he expected it to fall to one. Any value above one indicates the company trades at a premium to its Bitcoin holdings. Strategy's mNAV currently stands at 1.18, per the company's website.Bitcoin's shaky performance as of late has been fuel for skeptics like stockbroker Peter Schiff, a longtime critic of the cryptocurrency. Schiff took to social media on Sunday to decry Strategy's business model as a "fraud.""Regardless of what happens to Bitcoin, I believe $MSTR will eventually go bankrupt," Schiff declared in a post on X. He challenged Saylor, widely regarded as the face of the company, "to debate this proposition with me." Both he and Saylor are slated to appear at a conference in Dubai next month.Strategy didn't immediately respond to a request for comment."MSTR's business model relies on income-oriented funds buying its 'high-yield' preferred shares. But those published yields will never actually be paid," Schiff wrote in a separate post. "Once fund managers realize this they'll dump the preferreds & $MSTR won't be able to issue any more, setting off a death spiral."Doubts over the company's ability to service its preferred dividends and debt interest costs have been weighing on shares.Strategy has $689 million of annual preferred and debt-service payments and little income to cover that cost. Its Bitcoin holdings generate no income, and its software business, the core of the company at the time of its founding in 1989, brings in little cash.Write to Mackenzie Tatananni at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.