"Few business topics are garnering more coverage than Michael Saylor's unconventional strategy at Strategy, the software purveyor turned Bitcoin treasury outfit he still controls as top shareholder and Executive Chairman (the firm was formerly known as MicroStrategy). But one big shift has gone almost entirely unnoticed. As Bitcoin prices plunged, Saylor has attempted to remediate the situation by unleashing a torrent of new shares, the size of which has never before witnessed by a big market cap U.S. company. This immense dilution is keeping his Bitcoin stash growing as a point of pride-but dragging shareholders into dangerous territory."
"At the close of Q2 2020, shortly before Saylor started buying Bitcoin, today's Strategy had 76 million shares of Class A common stock outstanding (it also has Class B harboring extra voting rights that are mostly owned by Saylor; I'll use Class A since they account for all the issuance in the past six years.) As of February 12, the number stood at 314 million. That's an increase of 4.13x or 313%."
"Strategy pioneered a model based on constantly increasing the amount of Bitcoin its investors own per share, or its key metric of BPS (Bitcoin per share). Until this year when it also moved into preferreds in a big way, Strategy relied mostly on raising funds from equity offerings to amass the signature virtual currency. The process amounted to a kind of magical arbitrage: Strategy's stock price kept increasing much faster than the price of Bitcoin. So by selling shares at what now look like highly inflated prices and buying ever more coins, Saylor could keep hiking the count every shareholder effectively "owned.""
Michael Saylor's company Strategy (formerly MicroStrategy) has pursued Bitcoin accumulation by issuing large amounts of equity. Class A shares rose from 76 million at Q2 2020 to 314 million as of February 12, a 313% increase. The company emphasizes BPS (Bitcoin per share) and historically sold shares when its stock price outpaced Bitcoin, using proceeds to buy more coins. This equity-driven approach created dilution far greater than peers among large-cap U.S. firms. Comparable dilution examples include Wayfair at 30% and Twilio at 27%. Recent expansion into preferreds further amplified the capital-raising strategy and associated shareholder risk.
Read at Fortune
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