Facing questions from critics about its ability to fund dividends on its various classes of preferred stock, Strategy (MSTR) and its executive chairman Michael Saylor announced early Monday the creation of a reserve of US$1.44 billion.
The reserve was raised via last week’s sale of common stock, and the company initially intends to keep enough cash in the reserve to fund at least twelve months of dividends, according to a press release. The strategy further intends to add to the reserve with the ultimate goal of covering 24 months or more of dividends.
CEO Phong Le noted that the reserve currently covers 21 months of dividends.
New goals
Given the reality of the recent dip in bitcoin prices (down another 5% to $86,000 Monday morning) versus the company’s year-end expectations of $150,000, Strategy also adjusted its full-year profit and bitcoin dividend targets.
Based on a year-end price range of $85,000-$110,000, the strategy is indicative of full-year net income ranging from a loss of $5.5 billion to a gain of $6.3 billion.
The so-called bitcoin dividend target has been cut to a range of 22%-26% against the previous target of 30%.
The full-year bitcoin dollar gain target has been cut to $8.4 billion to $12.8 billion against the previous target of $20 billion.
New bitcoin purchases
The company also announced modest new bitcoin purchases of 130 coins for $11.7 million, or $89,860 per coin. BTC. That brings Strategy’s stack to 650,000 BTC acquired for $48.38 billion, or $74,436 per coin.
The purchase was funded via the sale last week of 8.214 million shares of common stock, raising $1.478 billion. The bulk of this money went to finance the previously mentioned dollar reserve.
MSTR shares are down 4.4% in pre-market trading alongside bitcoin’s steep overnight decline.
