Strategy halts Bitcoin acquisitions before releasing Q1 financial results
Ahead of Tuesday's quarterly financial disclosure, Michael Saylor announced a temporary halt to Bitcoin purchases, as analysts forecast Q1 losses.
As the globe's largest publicly traded Bitcoin holder, Strategy is temporarily suspending its cryptocurrency acquisition activities while preparing to release its quarterly financial results for the first quarter, scheduled for Tuesday.
Executive Chairman Michael Saylor declared "No buys this week" in a Sunday message posted to X, the platform where he has consistently communicated planned acquisition activities to followers.
According to an 8-K document submitted to the US Securities and Exchange Commission on April 27, the corporation, headquartered in Tysons Corner, Virginia, most recently procured 3,273 Bitcoin valued at $255 million during the period spanning April 20 through 26.
As of the latest disclosure, the firm's Bitcoin holdings total 818,334 BTC, purchased at an average acquisition cost of $77,906 per coin, pushing Strategy's overall cost basis to $75,537. CoinGecko data from Sunday indicated the leading cryptocurrency by market capitalization was trading at $78,787.08.
Last month's buying activity by Strategy, combined with capital flowing into US spot price exchange-traded funds, contributed to driving Bitcoin's price upward by 12% throughout the month of April.
Quarterly loss expected amid scrutiny over STRC dividend
Financial analysts on Wall Street are projecting that the earnings announcement scheduled for Tuesday will reveal a per-share loss of $18.98, predominantly attributable to the company leadership's mark-to-market Bitcoin accounting methodology. This figure represents an increase from the prior year's corresponding quarter loss of $16.49, based on data compiled by Yahoo Finance.
Saylor has a scheduled speaking engagement on Wednesday at the Consensus industry conference taking place in Miami Beach, Florida.
Concerns have emerged among certain equity market observers regarding the company's dependence on STRC, Strategy's perpetual preferred security instrument, particularly due to the 11.5% dividend yield the financial product provides to its investors.
Peter Schiff, serving as chief economist and global strategist at Euro Pacific Asset Management, who has in the past characterized Strategy as a "Ponzi scheme," reiterated his criticism on Sunday, raising questions about the firm's capacity to maintain the dividend payments.
Gambling that Bitcoin will rise by more than 11.5% a year does not change the Ponzi like structure of STRC.
Additional apprehension regarding the STRC dividend was expressed by Joseph Parrish, a Seeking Alpha blogger, who stated in his analysis published on April 28 that the company's existing cash reserves fall short of what would be necessary to fund two years worth of STRC dividend obligations, which will inevitably compel ongoing sales of Strategy's common stock and elevate investor exposure to risk should Bitcoin fail to meet performance expectations.
Parrish assigns the company's equity, which is traded under the MSTR ticker symbol, a "Hold" recommendation, pointing to elevated leverage, ambiguous catalysts, and difficult risk management conditions despite a reduced share price. His assessment contrasts sharply with perspectives from other market analysts, as evidenced by financial analysis platform TipRanks, which indicates a prevailing "Strong Buy" consensus rating for Strategy's shares listed on the Nasdaq exchange.