Strategy’s Liquidity Approaches Its Debt: What Changed with the Preferred Stock?

Strategy has brought its dollar cash almost in line with its debt. Net leverage, which is the ratio of the remaining burden after deducting cash from debt relative to its Bitcoin reserves, has approached zero with this development, according to the company’s own calculations.

According to information reported by CoinDesk, Strategy, the largest publicly traded Bitcoin holder, has accumulated $6.69 billion in liquidity. The company’s total debt stands at approximately $6.75 billion. The difference has significantly reduced the debt pressure.

In this calculation based on the company’s approximately $66 billion Bitcoin reserve, the gap between debt and cash remains very small. However, this situation does not mean that the debt has been fully paid or that new Bitcoin purchases have been made.

The preferred stock known as STRC is still trading below $100

The company has grown its dollar reserves in recent months, specifically to cover preferred stock dividends. Strategy’s $5.1 billion reserve is at a level that can cover dividend payments, which amount to approximately $1.7 billion per year, for about four years. Additionally, a $1.59 billion cash pool was created for more flexible use.

Michael Saylor stated that this cash could be used for purposes such as Bitcoin purchases, dividend and interest payments, share buybacks, and the repayment of convertible debt.

Strategy’s variable-rate perpetual preferred stock, STRC, which has priority in dividend payments, rose more than 35% from its June low to reach $97.23. Despite this, the stock remains below its $100 par value. Since debt precedes preferred shares in the corporate capital structure, reducing debt could support STRC. In May, Strategy repurchased $1.5 billion of its convertible bonds maturing in 2029.