Michael Saylor’s BTC company Strategy told investors that its STRC share buybacks would “taper” as STRC neared $100 per share. However, instead of tapering, the company spent an all-time record amount of cash last week on buybacks within 0.4% of STRC’s $100 par value.
STRC has traded as low as $71.25 this year, but Strategy didn’t buy back any shares that week. It was even too timid to buy back in the $80s and low $90s.
Finally, after STRC rallied 98.6% of the way back to its intended $100 stock price, and despite its written guidance to “to taper [repurchases] as STRC approaches a trading price of $100 per share,” Strategy plowed more cash than ever into STRC.
Specifically, the company disclosed spending $193.1 million last week at an average price of $99.60, and raised its STRC buyback authorization to $3 billion from $2 billion in the same SEC filing.
Strategy funded the latest buybacks from a dwindling pile of so-called “USD Cash,” which is different from the company’s total cash.
Put simply, all of Strategy’s piles of cash are dwindling and as they deplete, the company mostly replenishes them by diluting common shareholders of the company, issuing and selling more shares of MSTR to raise more cash.
To be precise, it also infrequently sells tiny amounts of BTC, and generates small amounts of revenue from software sales.
Unlike STRC, the supply of MSTR has only ever gone up this year. The lion’s share of the cash comes from MSTR dilution.
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