Strategy’s Convertible Bond Debt Reaches $6.7 Billion, Here’s What Was Revealed at BTC Prague
Debate over Strategy’s recent capital raise and concerns about potential shareholder dilution resurfaced during a panel discussion at BTC Prague on Wednesday. Strategy Executive Chairman Michael Saylor and Strike and Twenty One Capital CEO Jack Mallers discussed how investors should evaluate the company’s increasingly complex capital structure.
What Counts in mNAV Calculations?
Mallers challenged Saylor on how he defines the multiple Net Asset Value (mNAV) ratio. He pointed out that some investors include convertible securities trading below their conversion price in their calculations and questioned whether that approach accurately reflects the company’s valuation.
According to figures discussed during the panel, Strategy currently has US$6.7 billion in outstanding convertible debt. However, with the company’s stock trading around US$115, these instruments are considered unlikely to convert into equity under current market conditions.
For context, mNAV measures how a company’s market capitalization compares with its net asset value, indicating whether the stock is trading at a premium or discount. Convertible debt refers to bonds that can be exchanged for shares if specific conditions are met.
In response, Saylor said mNAV can be calculated by including the nominal value of convertible debt, common shares, and preferred shares. However, he emphasized that this is only one valuation framework. Investors can also use other metrics, such as gross asset value per share or net asset value per share, while choosing whether to include or exclude preferred shares and convertible debt.
Saylor Pushes Back on Dilution Concerns
Mallers then asked what type of transaction should truly be considered dilutive if issuing new shares in exchange for cash is not viewed as dilution.
The question became a key focus of the discussion. Strategy, formerly known as MicroStrategy, remains closely watched by the crypto industry because of its massive Bitcoin holdings.
Saylor argued that issuing shares to raise cash is not inherently dilutive because shareholders receive tangible assets in return, such as cash or Bitcoin. He maintained that this approach strengthens the company’s balance sheet, increases equity capital, and improves its credit profile.
To support his argument, Saylor noted that Strategy recently increased its U.S. dollar reserves by approximately US$100 million, bringing its total dollar-denominated holdings to around US$1 billion.
According to Saylor, as long as debt and preferred shares represent only a small portion of the company’s overall asset base, the specific valuation method becomes less important to its overall financial health.
The discussion at BTC Prague highlighted that Strategy’s capital structure should not be assessed solely through its Bitcoin holdings. Investors should also consider the company’s debt, preferred shares, and equity composition when evaluating metrics such as mNAV and the company’s broader financial position.
