Strategy targets Stretch recovery to fuel Bitcoin growth, CEO Phong Le says

Strategy is targeting a recovery in its Stretch preferred security to strengthen the digital credit engine that underpins its Bitcoin acquisition strategy, CEO Phong Le said during the company’s second-quarter earnings call this week. 

“Stretch is now trading at about $89.50. Our goal is to get this back to $99 to $100 because that helps our digital credit engine work and it helps us increase Bitcoin per share and ultimately accrue value to our common shareholders. So about a month ago, we issued five pillars that are gonna strengthen Stretch and strengthen digital credit,” Le stated.

To support the effort, Strategy expanded its US dollar reserve to a record $3.75 billion, equivalent to roughly 2.1 years of dividend and interest coverage, while maintaining a minimum one-year coverage target.

The company also authorized up to $1 billion of digital credit buybacks, up to $1 billion of MSTR repurchases, and retained flexibility to adjust Stretch’s dividend once the security returns to par.

Le said Strategy’s Bitcoin monetization program is designed to strengthen the balance sheet rather than reduce Bitcoin exposure. According to the executive, Bitcoin sales may fund up to $1.25 billion of additional US dollar reserves, annual dividend and interest payments of approximately $1.76 billion, and up to $2 billion in repurchase programs.

“We’re going to continue to create long-term value for MSTR. That’s the most important of our principles. And we’re going to do that primarily by increasing Bitcoin per share. How do we increase Bitcoin per share? We’re going to do that by growing demand for Stretch, getting it back to par, and observe the trading characteristics and learning from that,” Le explained.

On the company’s recent sales of 3,620 BTC, he said those transactions represented only about 0.4% of Bitcoin holdings at most and also generated potential tax benefits through realized losses.

Le also argued that concerns that Strategy materially influences Bitcoin prices are overstated. He said even the company’s largest weekly purchases accounted for about 1.4% of Bitcoin trading volume, while its biggest weekly sales represented approximately 0.08%.

He said the company expects to continue selling Bitcoin when advantageous to support its capital framework and long-term Bitcoin strategy.