Phong Le, the President and CEO of MicroStrategy, has personally invested $1 million in the company’s STRC preferred stock, signaling confidence in its return to par value. In a social media post, Le announced the purchase and stated his intention to hold the shares until they reach the $100 par value, adding that he may retain them even longer.
The investment comes at a critical time for STRC, which has been trading below its par value, recently dipping under $83. Following Le’s disclosure, the stock saw a modest recovery, climbing 1.46% to $89.88 before settling at $89.20. This move highlights the CEO’s commitment to the company’s capital strategy, which relies on STRC trading above par to fund Bitcoin purchases through an at-the-market equity program.
MicroStrategy has taken steps to bolster its financial position, reporting an increase in its U.S. dollar reserve to $1.4 billion. This reserve is intended to support the credit quality of its digital securities and ensure dividend and debt obligations are met. Additionally, the company raised $335.5 million by selling 2.71 million MSTR shares in the previous week.
However, the financing model has drawn criticism from various market participants. Peter Schiff, a long-time Bitcoin critic, has suggested that investors might pursue legal action against MicroStrategy and its executives, alleging potential violations of SEC marketing rules. Jeff Dorman, Chief Investment Officer at Arca, believes the company may need to sell between $3 billion and $4 billion in Bitcoin to alleviate pressure on its capital structure. Analyst Ali Martinez has compared aspects of STRC’s structure to the Terra ecosystem’s LUNA token, warning of potential risks.
Despite these concerns, MicroStrategy continues to accumulate Bitcoin. The company recently purchased 520 BTC for $35 million, bringing its total holdings to 847,363 Bitcoin. This acquisition underscores the firm’s unwavering commitment to its Bitcoin strategy, even as it navigates challenges with its preferred stock.