According to Michael Saylor, Strategy Inc. (NASDAQ:MSTR) may sell Bitcoin (CRYPTO: BTC) to fund repurchases of STRC (NASDAQ:STRC), the preferred stock he says must return to its $100 stated value.
Allowing STRC to operate below par would amount to "creating a failed, flawed product," and Strategy should spend as much as $4 billion if necessary to make it work, Saylor stated.
"If it took an extra $4 billion, spend $4 billion," Saylor said during Strategy’s second-quarter earnings call Thursday. "Just make the thing work."
Saylor designed STRC with help from ChatGPT, only for the preferred stock to fall sharply below its $100 peg in June.
Saylor Says STRC Must Work
Saylor disclosed Monday that STRC repurchases could be funded outside Strategy’s dollar reserve through sales of MSTR or Bitcoin, depending on market conditions.
Strategy reiterated Thursday that its board had authorized Bitcoin sales to fund repurchases of MSTR or its digital credit securities.
The company has $975 million remaining under a $1 billion digital credit repurchase program. It spent $25 million buying 288,930 STRC shares at an average price of $86.53 during the week ending July 26.
A separate $1 billion MSTR repurchase program remains untouched.
CEO Phong Le said Strategy will "sell Bitcoin when it’s advantageous to the company," adding that investors should expect it may continue doing so "on a go-forward basis."
Strategy has sold $218.4 million of Bitcoin this year to fund part of its preferred-stock dividends. Le said the company will prioritize STRC while it trades below par.
Prediction Markets Doubt a Quick Recovery
Polymarket gives STRC a 15% chance of touching $100 by Sept. 30 and a 34% chance by Dec. 31. Nearly $300,000 has traded on the market.
Traders also give Strategy a 10% chance of announcing that its holdings have reached 1 million Bitcoin by Dec. 31, with more than $500,000 traded on that contract. The probability had traded as high as 63%, before STRC lost its peg.
A separate market puts the probability of a margin call this year at 4%.
The odds suggest traders doubt Saylor can repair STRC quickly, but see little risk of an imminent collapse. Either way, Strategy may now sell Bitcoin to rescue an instrument built to buy more of it.
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