Strategy delivered a deeply conflicted quarterly report: Bitcoin rose more than 40% in Q3, and the company recorded about $21 billion in unrealized gains, swung from a loss back to a profit, and repurchased $176 million of STRC preferred stock. It even used that figure to compare itself with S&P 500 operating profits, claiming it would rank seventh.
But the stock wasn’t buying it. $MSTRB is down about 53% over the past 12 months, and losses from the first two quarters mean it still has nearly $1.9 billion in unrealized losses year to date. CEO Phong Le said that buying and selling Bitcoin is about the cost of capital, not the spot price. Net leverage has been brought down to 0.0%—with $7.1 billion in cash against $6.75 billion in convertible notes.
My take: Strategy looks less and less like a proxy for Bitcoin, and more like a highly leveraged structured credit product, with volatility driven by its financing—not just the price of $BTC .
So here’s the question: When you buy Strategy, are you buying Bitcoin, or its financing structure?
But the stock wasn’t buying it. $MSTRB is down about 53% over the past 12 months, and losses from the first two quarters mean it still has nearly $1.9 billion in unrealized losses year to date. CEO Phong Le said that buying and selling Bitcoin is about the cost of capital, not the spot price. Net leverage has been brought down to 0.0%—with $7.1 billion in cash against $6.75 billion in convertible notes.
My take: Strategy looks less and less like a proxy for Bitcoin, and more like a highly leveraged structured credit product, with volatility driven by its financing—not just the price of $BTC .
So here’s the question: When you buy Strategy, are you buying Bitcoin, or its financing structure?