Strategy Inc. (NASDAQ:MSTR) added 1,550 Bitcoin (CRYPTO: BTC) worth approximately $101 million last week, but critic Peter Schiff is not impressed.
“Damage Control”
Schiff argued that the transaction highlighted a growing problem for Strategy’s capital allocation model.
In an X post on June 8, Schiff called the purchase “damage control, while also increasing its U.S. dollar reserves by $100 million.”
He claimed that if Strategy sold common stock below the level required to make Bitcoin purchases accretive, existing shareholders effectively suffered dilution.
To commentators agreeing with Schiff’s interpretation, he said the stock sale is “the beginning of the end.”
Diluting MSTR Shareholders
The criticism centers on Strategy’s adjusted multiple-to-net-asset-value (mNAV) which measures how much investors are paying relative to the company’s Bitcoin holdings.
Trader Crypto Kaleo pointed to comments Saylor made during Strategy’s Q1 earnings call, where he stated that issuing common stock to buy BTC is accretive only when MSTR trades above roughly 1.22x mNAV.
Strategy’s adjusted mNAV recently fell to around 1.2x, below the threshold Saylor previously identified.
That raises concerns whether newly issued shares could reduce Bitcoin exposure on a per-share basis rather than increase it.
“The cash raise and BTC acquisition was funded entirely by common MSTR ATM sales,” Kaleo noted. “He’s diluting MSTR common shareholders.”
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