Strategy’s Debt Buyback Could Be Bullish for MSTR Long Term
MSTR shares are falling ever since Strategy announced a $1.5 billion 2029 convertible note buyback to reduce the company’s debt.
A lot of people were hyped about MSTR stock going over $200 but it looks like we are more likely headed to $150 or lower.
The good news is that I believe the $1.5 billion debt buyback is extremely bullish over the long run because it reduces debt plus allows Saylor to buyback the converts at a discount.
2029 Convertible Note Breakdown
Strategy currently holds over $8 billion in convertible note debt with around $3 billion in the 2029 converts alone.
Why Strategy’s Debt Buyback is a Smart Move
Strategy has accomplished a few things by retiring $1.5 billion in convertible note debt during the Bitcoin bear market:
- Strategy issued the 2029 converts when MSTR was trading at $433 and Bitcoin was trading at $92,300. The company can now retire 1/2 of that debt while Bitcoin is trading under $80,000.
- With a $672 conversion price, MSTR shares would need to go up almost 4x over the next few years to be redeemable.
- Michael Saylor could use proceeds from the STRC ATM to buyback the debt. STRC dilution helps to avoid diluting MSTR shareholders, which could increase BTC per share.
- Thanks to STRC, Michael Saylor doesn”t need to worry about selling Bitcoin to repay some of its debt.
Risk Factors
We are currently in a Bitcoin bear market so MSTR shares won’t necessarily benefit right away due to declining Bitcoin prices in the short term.
There isn’t much risk in this buyback because Strategy issued the 2029 converts when MSTR stock was $433.
The biggest concern is whether Bitcoin will keep crashing and if Strategy can keep up with its preferred stock dividend requirements.
STRC will be able to retire much (if not all) of Strategy’s debt if Stretch can continue to attract capital and new HODLers.
The good news is that STRC hit a record $1.5 billion in volume on May 14th and continues to grow in terms of market cap.
Debt Buybacks During Bear Markets Are Bullisjh
It’s great to see Strategy pay off its debts during the bear market in order to come out stronger when the Bitcoin bull market returns in Q4 2026 (supposedly).
Debt Buybacks increase MSTR BTC per share and reduce the company’s current net leverage of 9%.
In a perfect world, I think Strategy can equitize all of their exisitng debt and become debt free over the next few years.
The 2028 Bitcoin halving is less than 2 years away and could provide explosive upside for MSTR shares around 250 days after the Bitcoin Halving (Sometime in December).
That’s why I’m super bullish on MSTR shares even though many haters want MSTR stock to crash to $0.
