The Premium Problem

For years, Strategy Inc. (Nasdaq: MSTR) traded like a leveraged bet on bitcoin’s price, often commanding double or triple the value of the coins sitting on its balance sheet. That gap, known as market value to net asset value (mNAV), is what let the company sell new shares, buy more bitcoin, and repeat the cycle.

In a recent appearance on Laura Shin’s Unchained Podcast, Hayes argued that the cycle is running out of road now that bitcoin’s price growth has slowed rather than reversed. He noted that bitcoin does not need to fall for Strategy’s model to break. It just has to stop accelerating.

Bitcoin briefly topped $81,000 on August 25 before easing back toward the high $70,000s, a kind of sideways grind that Hayes says punishes Strategy’s structure. With the stock’s enterprise mNAV compressed to roughly 1.01x and its basic and diluted measures sitting near 0.73x and 0.74x as of August 27, Strategy now trades close to the raw value of the 840,447 BTC on its books. That leaves almost no premium left to fund another buying cycle.

Three Choices, No Good Ones

Hayes says the shrinking premium leaves Saylor with three levers, and each carries a cost. He laid out the following scenarios:

• Strategy can issue new shares, but doing so without a healthy premium dilutes existing holders instead of rewarding them.
• It can sell bitcoin outright, cutting against the “never sell” identity that built the stock’s following.
• It can trim dividends on its preferred shares, risking the confidence of income-focused investors who bought in for the yield rather than the bitcoin exposure.

That tension is very real given that Bitcoin.com News reported in May that Strategy held 818,334 BTC at an average cost of $75,537 each, against roughly $1.5 billion a year in combined obligations on two preferred-stock instruments: STRK, paying 8%, and STRC, paying between 10% and 11.5%.

At the pace those dividends were running in May, the company had roughly 18 months of coverage before needing a new funding source. Saylor said at the time the company would “probably sell some bitcoin to pay a dividend just to inoculate the market,” a line Hayes has since mocked, accusing Saylor of playing “Jedi mind tricks” with investors over how far those sales could eventually go.

Hayes’ broader argument is not that Strategy collapses overnight but that the stock’s original reason for existing, letting investors pay extra for equity-funded bitcoin exposure, stops making sense once bitcoin’s price is grinding sideways instead of compounding higher.

He has told investors that anyone who wants plain bitcoin exposure through a brokerage account can simply buy a spot exchange-traded fund (ETF) instead, without paying for Strategy’s leverage or carrying its dividend overhang.