Faced with questions from critics about its ability to finance the dividends of its various classes of preferred shares, Strategy (MSTR) and its executive chairman Michael Saylor announced Monday morning the formation of a reserve of 1.44 billion US dollars.
The reserve was built through the sale of common stock last week and the company initially intends to keep enough money in the reserve to fund at least twelve months of dividends, according to a press release. Strategy further intends to add to the reserve with the ultimate goal of covering 24 months or more of dividends.
CEO Phong Le noted that the reserve currently covers 21 months of dividends.
New targets
Given the reality of Bitcoin’s recent fall (down another 5% to $86,000 Monday morning) compared to the company’s expectations of $150,000 at the end of the year, Strategy also adjusted its full-year profit and bitcoin return targets.
Now assuming a year-end price range of $85,000 to $110,000, the strategy is moving toward a full-year net profit ranging from a loss of $5.5 billion to a gain of $6.3 billion.
Bitcoin’s return target was reduced to a range of 22-26%, from a previous target of 30%.
The full-year Bitcoin dollar gain target was reduced from $8.4 billion to $12.8 billion, down from the previous target of $20 billion.
New purchases of bitcoins
The company also announced modest new bitcoin purchases of 130 coins for $11.7 million, or $89,860 per BTC. This brings Strategy’s stack to 650,000 BTC acquired for $48.38 billion, or $74,436 per coin.
The purchase was financed by last week’s sale of 8.214 million shares of common stock, which raised $1.478 billion. Most of this money went to fund the dollar reserve mentioned earlier.
MSTR shares are down 4.4% in pre-market trading, alongside the sharp decline in bitcoin’s price overnight.
