Strategy’s MSTR hits lowest since April as company eyes expanded stock issuance for bitcoin purchases

Strategy's (MSTR) stock fell on Tuesday to its lowest point since April, after the company announced it would lower the threshold for selling shares to fund more bitcoin purchases.

MSTR closed down 7.43% on Tuesday at $336.57, with an additional 0.76% drop in after-hours trading, according to The Block's Strategy price page. This made for Strategy trading at its lowest level since April 21. MSTR hit a high of $455.9 during the bitcoin rally in July.

This decline comes as bitcoin's recent slump to around $113,000 and the company's latest announcement to expand its stock sale plan to buy more bitcoin.

In a post on social media platform X, Michael Saylor shared that Strategy is adding an update to its MSTR Equity ATM Guidance "to provide greater flexibility in executing our capital markets strategy."

This announcement resulted in backlash among MSTR holders as the company’s updated policy allows it to issue new shares when MSTR trades under 2.5 times its net asset value. This move aims to give MicroStrategy the flexibility to raise capital for purposes such as covering debt interest and paying dividends.

User @thorleifegeli wrote in response to Saylor's post that this update raises a red flag. "Just a couple of weeks ago at the earnings call, it was announced no issuance below 2.5mNAV. Why the change? Promising investors one thing, then changing very soon after, is not a good sign in my opinion," the X user wrote.

At the July 31 earnings call, Strategy's MSTR Equity Guidance noted that "we will not issue MSTR below 2.5x mNAV except to pay interest and dividends."

The newly shared guidance states: "Strategy will tactically issue MSTR to (1) pay interest on debt obligations (2) fund preferred equity dividends and (3) when otherwise deemed advantageous to the company."

It appears that the decision has raised concerns among some investors about the company's motivations for the change.

Meanwhile, several other crypto-related companies have also seen declines on Tuesday. Crypto exchange Bullish closed down 6.09% at $59.51 and slipped another 3.24% in after-hours trading, while Robinhood dropped 6.54% to $107.50 and declined a further 1.23% after the close. Coinbase Global fell 5.82%, Galaxy Digital lost 10.06% and Circle slipped 4.49%. The Nasdaq Composite was down 1.46% on Tuesday.