MicroStrategy's CEO Phong Le assures stability until Bitcoin drops to $8,000-$10,000, emphasizing the need for U.S. dollar reserves.
CEO Phong Le highlights the importance of bolstering U.S. dollar reserves for stock recovery
MicroStrategy's CEO, Phong Le, has stated that the company does not plan to react unless Bitcoin's value drops to between $8,000 and $10,000. This threshold represents an approximate 85% decline from Bitcoin's current price of about $64,500.
In an interview with Bloomberg TV, Le expressed confidence in the company's balance sheet, saying, "Until that point in time, we feel very secure about the balance sheet." He emphasized the need for a robust capital structure that can withstand market downturns while also taking advantage of bullish trends.
The company's preferred stock, STRC, has faced challenges recently, dropping below its $100 par value and falling to around $75 last month. Le noted that the recovery of STRC to around $90 is contingent on improving U.S. dollar reserves, which are crucial for facilitating Bitcoin purchases.
STRC is designed to provide necessary cash flow for Bitcoin acquisitions in exchange for a regular dividend, currently yielding 13% annually. However, if STRC remains below $100, it could hinder MicroStrategy’s ability to issue new shares to fund further Bitcoin investments.
Le reiterated the importance of maintaining liquidity in U.S. dollar capital, stating, "We have learned in recent months that maintaining liquid access to U.S.-dollar capital is essential. Therefore, we will continue to build that reserve."
MicroStrategy's shares saw a nearly 6% increase, closing at $97.58, although they remain 36% lower than their value at the beginning of the year and down 78% from a year ago. Analysts are closely monitoring the company's multiple to net asset value (mNAV), which recently rose slightly to 1.02, indicating that shares are trading at a marginal premium to the value of its Bitcoin holdings. Le concluded by stating that as long as the company's stock is valued above its Bitcoin assets, it reflects shareholder confidence in its performance beyond cryptocurrency.
