The debate over Strategy’s (MSTR) recent dilutive transaction resurfaced, this time with Michael Saylor, executive chairman of Strategy, and Jack Mallers, CEO of Strike and Twenty One Capital (XXI), on Wednesday at BTC Prague, as the two weighed in on how investors should evaluate the company’s increasingly complex capital structure.
Mallers asked Saylor how he defined multiple net asset value (mNAV), noting that some investors include out-of-the-money securities in their calculations and asking whether he agreed with that approach. (Strategy currently has $6.7 billion in convertible debt that is out-of-the-money, meaning the securities are not expected to be converted into stock at the current share price of $115).
Mallers also challenged Saylor’s view on dilution, asking for an example of a dilutive transaction if issuing shares for cash is not considered dilutive.
Saylor responded that mNAV can be calculated by including the notional value of convertible debt, common stock and preferred stock. However, he argued that mNAV is just one assessment framework. Investors can also evaluate gross assets per share and net assets per share, which may exclude preferred stock or convertible debt from the calculation. According to Saylor, the distinction matters less when debt and preferred stock represent only a small portion of the company’s overall assets.
Regarding dilution, Saylor argued that issuing shares for cash is not inherently dilutive because shareholders receive a tangible asset in return, whether cash or bitcoin. He said raising capital strengthens the balance sheet, broadens the capital base and improves solvency. As an example, Saylor cited Strategy’s recent addition of about $100 million to its U.S. dollar reserves, bringing the total to about $1 billion.
