MicroStrategy (MSTR.US) repurchases doubled to 2 billion, maintaining STRC's face value of 100 yuan

According to WooFunai, MicroStrategy (MSTR.US) announced a significant expansion of the repurchase scale of its preferred stock STRC to 2 billion US dollars. The core goal is to re-anchor the stock price at the $100 face value level to repair the damaged financing capacity.

This strategic adjustment occurred as the September 8 benchmark date set by Michael Saylor (Michael Saylor) was approaching. At that time, STRC's stock price was still hovering below face value. Previously, MicroStrategy had carried out a large-scale repurchase for seven weeks. The original authorized amount of 1 billion US dollars was almost exhausted, and the remaining available capital was only about 188.5 million US dollars. The Board's decision not only raised the available funding to $1.19 billion, but also marked a significant escalation in intervention.

It is worth noting that although the discount rate for repurchase operations has narrowed from over 13% at the beginning of the launch to less than 3% now, the capital costs supporting STRC continue to rise. Every time a share of less than face value is bought back, it means that the preferred share capital of 100 US dollars and its corresponding discounted dividend obligation disappear simultaneously. As the stock price approaches face value, this arbitrage advantage gradually weakens.

However, even though more than 80% of the original plan has been implemented, the new quota still provides room for micro-strategy to continue to intervene. According to data compiled by WooFunai, this direction of capital expenditure is in stark contrast to the initial plan, reflecting the management's urgent need to maintain stable stock prices.

At the same time, the latest intervention has led to a sharp reversal in MicroStrategy's capital allocation logic. Previously, the company ended a two-month Bitcoin fundraising period in an attempt to balance payment of preferred stock debt and expanding Bitcoin assets, but this parallel state of affairs only lasted for a week. As of September 7, the Bitcoin liquidity pool held by MicroStrategy was US$1.44 billion. The pool has multiple uses, including buying Bitcoin, increasing dollar reserves, optimizing the capital structure, and supporting other Bitcoin-related businesses. The company's current reserves of US$5.1 billion are earmarked to pay dividends on preferred shares and interest on outstanding debts.

This strict division of the use of funds reveals the true source of STRC's repurchase funds: it is drawn directly from the flexible liquidity pool originally used to buy more bitcoins. As of the end of the statistics, MicroStrategy held a total of 845,050 bitcoins, with a total acquisition cost of US$63.73 billion, and an average purchase price of US$75,412.

However, market developments over the past two weeks suggest that STRC's difficulties have forced the company to adjust the pace of its asset accumulation. When new shares are issued to provide capital, MicroStrategy will simultaneously meet the repurchase and BTC purchase requirements; however, since no new shares were issued last week, all available funds were directed to STRC repurchases, causing the Bitcoin purchase activity to completely stop.

The impetus for MicroStrategy to return STRC's stock price to a face value of $100 stems from the essential design of its sustainable financing instruments. STRC's variable dividend mechanism aims to keep the stock price close to face value, and the company's policy prohibits the issuance of new shares at a discount, which means that under discounted conditions, the securities cannot perform their proper financing function. Once the stock price stabilizes at $100, MicroStrategy can restart preferred stock issuance channels, thereby reducing dependence on common stock issuance. STRC has previously proven its ability to attract money: in the initial issuance plan for 2025, circulation surged from an estimated 5 million shares to more than 28 million shares, and eventually raised $2.52 billion in capital. Therefore, it is essential to restore its ability to distribute.

Although September 8 is not the deadline stipulated in the contract, and STRC's stock price has rebounded sharply from its May low and is currently only a few dollars below face value, the board of directors decided to double the repurchase authorization, implying that the balance sheet support required to complete this rebound far exceeded expectations. The key test for the future is how much additional credit will be needed for the micro-strategy to rely on external demand to stabilize STRC at $100, completely transforming it from a role that consumes capital to a role that raises capital.