Strategy Says It Might Sell Up to $1.25 Billion in Bitcoin. So Is MSTR a Buy, Sell, or Hold Right Now?
Strategy was all in on Bitcoin until Bitcoin's price fell dramatically.
Overview
Strategy (NASDAQ: MSTR) had a simple business model; it basically issued stock, preferred stock, and debt, and used the proceeds to buy Bitcoin (CRYPTO: BTC). It just held the Bitcoin, acting as a "Bitcoin treasury." That model appears to be broken following Bitcoin's deep price decline, and investors should be worried about the implications.
To be fair, Strategy is making the right move by shifting from a buy-and-hold model to a more dynamic one, noting that it may sell up to $1.25 billion in Bitcoin. The purpose of the sales is to fund stock buybacks and to support payments on the preferred stock and bonds it sold. It also wants to build a cash reserve roughly equal to 12 months of preferred stock and interest payments.
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Originally published at www.fool.com.