PERSPECTIVE: MSTR PREMIUM WHEEL STAGNATING OR CAUSING CAPITAL STRUCTURAL TRANSFORMATION

By Jason Huang (@Jhy256)

Original link: https://x.com/Jhy256/status/2060311582178193538

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The recent case of MSTR (Strategy deposited 41.48 BTCs worth approximately $30.3 million to Coinbase) deserves to be opened, because it is not just a company anymore。

Let's start with the good news at the capital level. In mid-May, Strategy repurchased $1.5 billion worth of nominal debt in 2029 with approximately $1.38 billion in cash at a discount of about 8 per cent, bringing the total amount of reversible debt down from $8.2 billion to $6.7 billion. The first reaction of the market is "defensive," but only capital structures, which is actually a clean operation -- He repurchased a deep-priced external debt with a transfer price of approximately $672 and almost impossible to transfer under the current MSTR ~ $159. Sooner or later, the debt will shift from an “upload of automatic stock transfer, passive deleveraging” to a “cash due”. An early write-off at a discount is tantamount to the elimination of a future cash wall, as well as a booking gain. From the point of view of liability management, this is a sub-item。

But the price is on another line: after this, there are only 871 million cash reserves, corresponding to priority dividends obligations of about 1.6 to 1.7 billion per year, covering only about six months — whereas he had previously set himself a target of 24 months。

This brings out the second layer. It is in itself an implicit statement that the buffer is spent instead of in the hands: Saylor probably thinks BTC's not far from the bottom, so he'd rather buy back cheap debt now than leave the cash idle. It's a bet at all times, except this time he's overrated. As a direct consequence, currency pressure has been raised passively -- the probability of selling BTC in the year on Polymarket has jumped from 55% to 84%, and the chain does see BTC moving to Coinbase. Only six months of ammunition is equal to telling the market that I will use other sources when necessary, and the most readily available source is the currency itself。

In the longer term, I think this is a phase of confusion for two reasons。

first, the trend in currency prices per se is not clear. $73k-77k, which brings a shock, the direction is not yet clear, and everyone is waiting for a confirmation。

Secondly, I think it's even more important: MSTR has grown to its own "reverseness" enough to influence currency prices. 843,738 BTCs, close to 4 per cent of total supply. When a company is large enough, “how it operates its own capital structure” is no longer an internal business, but a new variable for the entire market. The most direct expression is mNAV: now about 0.94x, which has collapsed by 1.0x. This means that the wheel of "a premium plus equity buys money and every share of the BTC rises and the stock price rises," basically doesn't move. The line drawn by the management itself was 1.22x — higher than it, and the purchase of shares was thicker; lower than it, it was more economical to sell the debt. It's a long way from that line。

So the conclusion is simple: I've been optimistic for a long time, and BTC and the bottom logic of this digital asset reserve, and I don't feel perjured. In the short term, however, there must be considerable pressure when a narrative is being discussed by all at the same time. Now the company's debt is almost entirely in deficit, more exaggerated, more leveraged and diluted. Capital market narratives are moving step by step from “pricing premiums to such companies” to “repricing them”。

This is not the prophecy of the spiral of death, more like the beginning of a paradigm shift: from an infinite growth story of increasing the purchase of money to a story of finely managed capital structures. The way the two stories are valued is completely different。

We'll see。