Strategy Inc. (NASDAQ:MSTR) Executive Chairman Michael Saylor and CEO Phong Le recently defended the company’s Bitcoin-focused capital strategy, arguing that near-term pain and equity issuance are necessary.
Is Strategy Diluting MSTR Shareholders?
During Strategy’s second investor Q&A with Natalie Brunell, Le addressed shareholder concerns after Bitcoin (CRYPTO: BTC) fell roughly 50% from its highs while MSTR suffered a rough 75% drawdown.
Le explained Strategy’s common shareholders remain its top priority but stressed that MSTR is deliberately designed to provide amplified Bitcoin exposure. That means it can outperform Bitcoin during rallies while experiencing steeper losses during downturns.
Saylor acknowledged the frustration, noting that he personally owns more than 19 million MSTR shares.
“I feel your pain,” Saylor added. “But I think we have to be prepared to have difficult years. It might be one year, it might be two years.”
He added that investors in MSTR should ideally have a seven-to-10-year horizon, arguing that the company remains in investment mode while building its digital-credit business.
“I think there is this misconceived notion that issuing our equity is dilutive to our shareholders,” Le quoted.
He argued that issuing MSTR above 1x its net asset value to acquire Bitcoin can actually be accretive on a BTC-per-share basis.
Strategy’s focus, therefore, isn’t simply on the number of outstanding shares but on whether each financing transaction increases the amount of Bitcoin attributable to each share.
Saylor believes prioritizing short-term support for MSTR could undermine its longer-term value proposition.
Why Strategy Is Focused on Digital Credit
Saylor revealed that Strategy’s central objective is no longer simply accumulating as much Bitcoin as possible at any given price.
Instead, it wants to build what he called the world’s “best credit,” particularly through STRC, while using proceeds to acquire Bitcoin, maintain dollar reserves or manage its capital structure.
Saylor estimated the digital-credit market at roughly $15 billion today but believes it could eventually expand to $100 billion, $400 billion and ultimately $1 trillion.
Strategy is effectively betting that Bitcoin’s long-term appreciation will exceed its cost of capital. Saylor put its current hurdle rate at roughly 10.5%.
“We’re not really traders,” Saylor said, explaining that Strategy’s investment case depends more on Bitcoin outperforming that hurdle over decades than on timing short-term BTC bottoms.
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