Arca's Jeff Dorman warns Strategy's cash runway is five months unless it sells Bitcoin
Jeff Dorman of Arca argues that Strategy's recent debt buyback was a balance sheet mismanagement, leaving the firm with only five months of cash unless it sells Bitcoin. He notes that even Michael Saylor's own mNAV threshold suggests the stock issuance machine is no longer accretive.
Live now on Unchained: I'm with @jdorman81 of @arca on the cracks in Strategy's bitcoin treasury, and why he thinks the MSTR endgame is closer than the market admits. https://x.com/i/broadcasts/1nGeLLZekwZKX
Now on Unchained: @jdorman81 calls Strategy's recent moves "a pretty unforced error." They used their cash to pay down debt, and now "have five months left before they run out of cash unless they sell the Bitcoin." https://x.com/i/broadcasts/1nGeLLZekwZKX
Strategy raised $2B to reassure preferred holders, then a month later spent $1.4B of it buying back debt not even due until 2029. @jdorman81 calls it "a complete balance sheet mismanagement." https://x.com/i/broadcasts/1nGeLLZekwZKX
The bull case for Strategy, per @jdorman81: if bitcoin rips, it solves everything. And the math is friendlier than it looks. On a $57B bitcoin pile, "Bitcoin only has to go up like 2.5% every year" to cover the $1.7B in dividends. https://x.com/i/broadcasts/1nGeLLZekwZKX
Jeff Dorman: Strategy says selling stock to buy bitcoin only makes sense above an mNAV of 1.26. "Right now, it's trading at 1.23." So even Saylor has seemingly admitted the machine that built this company isn't accretive anymore. https://x.com/i/broadcasts/1nGeLLZekwZKX
Where would @jdorman81 want to be in Strategy's stack? Counterintuitively, the debt. Even in a default, $56B of bitcoin backs just $7B of debt. "You're fully covered. Your debt is not really at risk." https://x.com/i/broadcasts/1nGeLLZekwZKX
Saylor "has pulled a rabbit out of the hat multiple times," says @jdorman81. But on the $16B in preferreds that created this mess: "you'd be absolutely out of your mind crazy to do that. But he did, and here we are." https://x.com/i/broadcasts/1nGeLLZekwZKX
.@jdorman81 on the Polymarket MSTR mess: "this is one of the craziest things I've ever seen." Strategy sold bitcoin in May, there's "indisputable evidence," and the market still might pay out 'No'. https://x.com/i/broadcasts/1nGeLLZekwZKX
"It's just complete balance sheet mismanagement" Jeff Dorman on why Strategy is being forced to sell Bitcoin "The market was worried they weren't gonna be able to satisfy the dividend. So they raised about $2 billion and said now you don't have to worry for a year and a half because we have this $
"I don't see any scenario where you'd really want to own MSTR stock right now, given how dire the options are" Jeff Dorman ranks the Strategy capital structure from safest to riskiest "In a worst case where MicroStrategy defaults, you'd want to own the debt first. If you have $56 billion of Bitcoi
"It's just complete balance sheet mismanagement" Jeff Dorman on why Strategy is being forced to sell Bitcoin "The market was worried they weren't gonna be able to satisfy the dividend. So they raised about $2 billion and said now you don't have to worry for a year and a half because we have this $