Cryptocurrency analyst Willy Woo expressed doubt Monday that Strategy Inc. (NASDAQ:MSTR) would get liquidated in the next Bitcoin (CRYPTO: BTC) bear market, citing its outstanding convertible debt obligations.
Analyzing MSTR’s Debt Obligations
Woo took to X, highlighting a table with key upcoming dates and thresholds that could impact the company’s balance sheet, stock price and BTC holdings if triggered.
“The Holders Put Right Date” refers to the date when the bondholder has the right to sell the bond back to Strategy and “Debt” refers to the principal amount of the convertible notes at the risk of being put back.
“Conversion Threshold” is the per share price above which bondholders would likely prefer to convert their debt into MSTR shares instead of selling it back. The “Equivalent BTC Price” is the price of Bitcoin at which MSTR stock stays above the conversion threshold, assuming that the multiple to net asset value, or mNAV, is equal to 1.
The earliest put date is September 15, 2027, when a BTC price of $91,502 would make conversion to equity viable, shielding MSTR from partial liquidation. On the other hand, the apex cryptocurrency would need to increase by 2X-3X from its current levels to avoid liquidation pressure in 2028.
“MSTR liquidation in the next bear market? I doubt it,” Woo stated. “Ironically, there’s a chance of a partial liquidation if BTC doesn’t climb in value fast enough in an assumed 2028 bull market.”
Several X users pointed out that this is contingent on the debt not being refinanced.
See Also: MicroStrategy Falls Short Of Investment Grade In First S&P Global Credit Ranking
Will Strategy Stay Resilient?
Strategy has aggressively used financial instruments at its disposal to fund its Bitcoin accumulation strategy, currently carrying more than $8 billion in debt.
Michael Saylor, Strategy’s co-founder, said earlier this year that the company’s capital structure was smooth due to a pivot to the perpetual preferred stock strategy, asserting that it could endure an 80% drawdown and remain resilient even in a bear market.
Mixed Q3 Results
Strategy reported mixed third-quarter financials, with profits falling short of analyst estimates but revenue exceeding projections. The firm disclosed holding 641,205 BTC, worth over $70 billion, on its books, strengthening its position as the world’s largest cryptocurrency treasury.
Price Action: At the time of writing, BTC was exchanging hands at $101,914.06, down 2.41% in the last 24 hours, according to data from Benzinga Pro.
Strategy shares fell 0.49% in after-hours trading after closing 6.68% lower at $246.99 during Tuesday's regular trading session.
The stock demonstrated a low growth score — a measure of the stock’s combined historical expansion in earnings and revenue across multiple periods. How does it compare with Coinbase Global Inc. (NASDAQ:COIN) and other cryptocurrency-linked stocks? Visit Benzinga Edge Stock Rankings to find out.
Read Next:
Photo courtesy: PJ McDonnell / Shutterstock.com
