Strategy (NASDAQ: MSTR) announced on December 1st that it has established a $1.44 billion United States dollar (USD) reserve. This fund is intended to support dividend payments on preferred stock and service its debt obligations, as detailed in a recent filing with the U.S. Securities and Exchange Commission (SEC).
The company stated that this fund, named the "USD Reserve," was financed through proceeds generated from its at-the-market stock offering.
Strategy's objective is to maintain a balance within the USD Reserve sufficient to cover at least 12 months of dividend payments. The company also has long-term plans to extend this coverage to 24 months or more.
“Establishing a USD Reserve to complement our BTC Reserve marks the next step in our evolution,” stated Michael Saylor. “We believe it will better position us to navigate short-term market volatility while delivering on our vision of being the world’s leading issuer of Digital Credit.”
The company also confirmed its current holdings of 650,000 Bitcoin (BTC), which represents approximately 3.1% of the total Bitcoin supply that will ever exist.
MicroStrategy stock has experienced a significant decline, falling more than 60% from its peak. MSTR is currently trading near $177, continuing a month-long downward trend influenced by weaker Bitcoin prices and shifts in market sentiment.
Strategic Shift in Risk Management
For more than four years, Strategy's primary strategy involved converting available dollars into Bitcoin. The introduction of the new "USD Reserve," financed by its at-the-market stock program, signifies a notable structural change in the company's approach to risk management.
This development comes as the company's modified Net Asset Value (mNAV) has fallen to 1. This means Strategy's equity value is now trading at a valuation close to that of its underlying Bitcoin holdings, with no significant market premium. In response to this, Michael Saylor is implementing measures to stabilize the balance sheet.
By holding sufficient cash reserves to cover 12 to 24 months of payouts, Strategy is effectively insulating itself from short-term fluctuations in Bitcoin's market price. This strategy allows the company to continue its accumulation of BTC, which now totals 650,000 coins, representing approximately 3.1% of the total Bitcoin supply.
This strategic move also supports Saylor's long-term ambition for Strategy to become the leading global issuer of "Digital Credit." This vision is predicated on generating stable cash flows, rather than relying solely on the appreciation of Bitcoin.
Revised Bitcoin Assumptions and Earnings Outlook for FY2025
In the same SEC filing, Strategy revised its fiscal year 2025 (FY2025) guidance. This revision includes adjusted assumptions for Bitcoin's year-end price, reflecting recent market declines.
The company now projects that BTC will trade between $85,000 and $110,000 on December 31, 2025. This is a reduction from its earlier projection of $150,000.
Based on this revised price range, Strategy forecasts its FY2025 operating income to be between a loss of $7 billion and a profit of $9.5 billion. Net income is projected to range from a loss of $5.5 billion to a gain of $6.3 billion. Diluted earnings per share are expected to fall between a $17 loss and a $19 gain.
Strategy also updated its key performance indicator (KPI) targets for Bitcoin. The company now anticipates a BTC yield of 22%–26% and a BTC dollar gain between $8.4 billion and $12.8 billion. These projections assume the successful completion of capital raises to fund further Bitcoin acquisitions.
The company has adopted the latest U.S. accounting standards, which mandate the fair-value measurement of crypto assets. Strategy acknowledges that its earnings remain "extremely sensitive" to Bitcoin's market price and that actual results could differ materially if BTC prices deviate significantly from current assumptions.