Strategy Scrambles for Cash as Bitcoin Price Plunge Threatens Share Value

Strategy, a bitcoin accumulation company, is racing to raise cash as its MSTR stock and the falling bitcoin price make it increasingly difficult to meet its looming obligations. According to a recent SEC filing, Strategy raised $335.5 million by issuing more MSTR shares last week but only spent $34.9 million, or about 10%, on adding to its cryptocurrency hoard.

The remaining $300.6 million, nearly 90%, went towards shoring up its depleted cash reserve. Given the company's heavy potential obligations and plunging shares of its primary preferred stock, it is likely that Strategy will accelerate its cash-raising efforts in the coming weeks.

Strategy's MSTR stock has already dropped by nearly 30% to $87.25, which would require a share count increase of 25% to cover its upcoming obligations. However, if MSTR continues to decline and bitcoin falls to $50,000, Strategy's shares could trade near 60, making it even more challenging to meet its commitments.

To avoid forced sales of its bitcoin holdings, Strategy needs to raise billions of dollars in cash as soon as possible. The company has previously mentioned that a minimum cash reserve of $2.25 billion is necessary, but its current reserve stands at just $1.4 billion after using about $1.4 billion to retire convertible debt.