The company had previously limited stock sales below 2.5x market-to-net asset value (mNAV) strictly to cover debt interest or preferred share dividends. Under the new rules, the firm can now issue stock below this threshold whenever it deems it strategically beneficial.
mNAV measures how the market values the company relative to its assets, including Bitcoin holdings and operational resources. The prior limit was meant to protect shareholders from dilution.
Strategy’s policy shift has drawn mixed reactions from investors in the firm.
Meanwhile, other market experts see the adjustment as a tactical move that would help Strategy acquire more Bitcoin.
According to Basher:
“If Strategy is now able to issue new equity at mNAVs all the way down to 1.0, they effectively have two methods (issuing preferred stock & common stock) to acquire more Bitcoin (each one helping the other). Think of it as having two separate faucets to fill up a bathtub – allowing you to fill up the tub faster.”
However, he noted that while “Strategy runs a risk of acquiring too much Bitcoin too fast,” the company’s shareholders should want it to become the world’s financial fortress quickly because this would open them up to more market opportunities.
