Strategy Inc - Variable Rate Series A Perpetual Stretch Preferred Stock stock forum
MSTR luigi let’s go
MSTR where's Luigi
MSTR Since MSTR broke out of its old upward channel, it’s been consolidating in a new one. What do you guys think — does it play out like channel A or B?
MSTR Is an unrealized revenue from BTC price considered enough to get included in the S&P 500 index? Are they out of mind?
MSTR mwsmotorsports Here is my take on why an mNAV of less than 2.0 is bad news for shareholders... In the past when mNAV was low, circumstances were very different. First off, in the past Saylor was issuing common stock or 0% convertible debt (with distant future conversion obligations) to raise capital to buy BTC. An equal blend of the 2 methods had the effect of cutting immediate dilution in half. Because convertible debt does not result in dilution until years down the road, shareholders felt the immediate accretive gain of BTC bought using that method (at the expense of future dilution).
Second, unrealized gains had no immediate tax consequences nor cash drain. If the company had a gain on paper, no cash had to be set aside for taxes. All the proceeds from ongoing ATMs and debt offerings could be used to purchase BTC.
But now the world has changed. For whatever reason, Saylor abandoned the debt portion of the original "21/21 plan", which was later upgraded to the "42/42 plan", and kept only the ATM portion of the plan. The 0% convertible debt was replaced with preferred stock that pays on average a 10% (or higher) dividend. So now the company is on the hook for $700M per year in dividend payments. That is cash going out the door without any new BTC on the balance sheet to show for it. What's worse, some of it is still convertible, which means shareholders are on the hook for extreme dividends until those shares are converted to common stock — which will cause more future dilution with no increase in BTC held.
In addition unrealized gains are now taxed at 21% (federal and state). That means the company will be doing ATMs just to pay their tax bill. Again, no new BTC will hit the balance sheet as a result. Currently more than $1.25B in taxes are owed for this year, roughly about 3 times more than was raised ATM last week.
Bottom line is now when Saylor sells shares ATM, he must get more bang for the mNAV buck in order to offset the drag of dividends and taxes. How much more bang for the buck? That depends on how much BTC goes up for the year. Because gains on BTC do not result in cash flow, higher gains require more cash to pay taxes. In a flat year for BTC, an mNAV of 1.85 may be sustainable without diluting shareholders excessively to pay dividends. But in a year of where BTC gains 30%, the mNAV needs to be closer to 2.50 to prevent massive dilution just to pay taxes and dividends.
MSTR here's my take, BTC up, Sol, Eth up, S&P sort of up, MSTR and friends= NO rally till we get an announce ( or simply don't get an announce) on S&P inclusion on Friday. It's obviously being driven down in anticipation of that. Other than that, from what I can see, the mNAV is not "that" bad compared to history, though we would like it to be greater. Of course, if it does not get included, it will tank to previous support, maybe $232-ish. And fast... like, in a day... (and mNAV will truly be something to worry about but still, would basically be 1x according to my indicator) If it gets included, "then" rally.
MSTR Wendy is hiring
MSTR guess its arbys for lunch today ew.
MSTR 1.56mnav is still too high for the market