Strategy’s discretionary cash falls 72% as buyback authorization rises to $3 billion

The firm’s discretionary USD Cash holdings declined about 72% to $447.3 million as of Oct. 18, down from $1.61 billion on Aug. 30. The latest weekly decline of $193.2 million comprised $193.1 million in STRC repurchases and $100,000 in Bitcoin purchases.

Strategy financed $22 million of its latest Bitcoin acquisitions through the sale of 140,872 common shares, using just $100,000 of USD Cash for the remainder.

Meanwhile, its separate USD Reserve, designated primarily for dividend and debt-interest payments, stood at $4.83 billion after the company withdrew $45.5 million for preferred-stock dividends.

Strategy expands STRC buybacks despite spending $562 million near $99

Strategy’s board increased its digital credit securities repurchase authorization by 50% to $3 billion from $2 billion, leaving approximately $1.16 billion available for additional purchases.

The expansion follows the company’s spending roughly $1.84 billion to buy back STRC since it began repurchases in July.

Of that amount, the company deployed $713.5 million in the last four weeks through Oct. 18, including about $561.8 million during the three weeks beginning Sept. 28, when STRC traded between $99 and $100 for most of the period.

The sustained buying contrasts with Strategy’s original plan to gradually reduce repurchases as the preferred stock approached its intended trading range.

In July, Chief Executive Officer Phong Le said the company would make larger purchases at deeper discounts and taper spending as STRC recovered toward par. Its initial purchases averaged about $86.53 per share, securing a discount of nearly 13.5%.

However, the latest repurchases averaged approximately $99.60 per share, a discount of just 0.4%. Strategy has continued deploying substantial capital, even as the immediate financial benefit of buying below stated value has narrowed.

Market commentator Mark Harvey observed that Strategy has repurchased about one-fifth of STRC’s outstanding shares without securing a sustained return to $100. He questioned whether demand for the security was proving weaker than anticipated despite the scale of the company’s intervention.

The continued expenditure also creates a funding challenge. As an illustration, the remaining $447.3 million in discretionary USD Cash would fund about 2.3 weeks of repurchases at the latest weekly pace of $193.1 million. Sustaining that pace would require replenishing USD Cash or using another funding source.

MSCI exclusion threat tests Wall Street’s bullish Strategy outlook

Strategy’s latest capital-management moves follow another difficult week for its common shareholders as index provider MSCI adopted new rules that could remove Bitcoin treasury companies from major global benchmarks.

MSTR fell 11.35% over the five trading sessions ended Oct. 16, declining from $154.34 to $136.83.

On Oct. 15, MSCI announced that companies classified as non-operating entities would become ineligible for its Global Investable Market Indexes. The changes potentially affect Strategy and Japan’s Metaplanet, with the final list of affected companies scheduled for Nov. 11 ahead of implementation on Nov. 30.

The threat adds another pressure point on Strategy’s equity financing model. A CoinDesk report shared by Ki Young Ju cited JPMorgan’s estimate that exclusion from MSCI benchmarks could trigger approximately $2.8 billion in forced selling by passive investment funds.

VanEck’s Matthew Sigel noted that STRC briefly reached $99.90 last week before falling to $97.72 following MSCI’s announcement. He argued that preferred-stock indexes largely lack MSCI-linked ownership, making STRC’s return to par a critical test of Strategy’s ability to restart larger Bitcoin purchases through at-the-market offerings.

Nevertheless, CryptoQuant Consensus data shows that the analysts it tracks remain overwhelmingly bullish on Strategy despite the index-related uncertainty.

CryptoQuant CEO Ki Young Ju pointed to price targets of $240 from Citigroup, $175 from Barclays and $195 from B. Riley, arguing that analyst expectations remain positive and that MSCI-related selling risks have largely been incorporated into MSTR’s valuation.

Ju said the more consequential indicators were Strategy’s market-value-to-net-asset-value ratio near one, STRC’s proximity to par and the company’s liquidity reserves supporting preferred dividends.

Strategy is scheduled to report third-quarter earnings on Oct. 29. MSCI will publish its final index deletion list on Nov. 11, ahead of the new rules taking effect after the Nov. 30 close.