 ▲ Strategy and Bitcoin (BTC) / AI-generated image © |
Renowned short seller Jim Chanos sharply criticized Strategy, which has touted the stability of its preferred shares despite a plunge in its stock price, questioning the company’s messaging strategy.
According to investment outlet Benzinga on February 15 (local time), veteran short seller Jim Chanos reacted strongly to Strategy CEO Phong Le’s remarks in a Bloomberg interview that the company’s perpetual preferred stock, Perpetual Stretch Preferred Stock (STRC), closing at $100 was “the story of the day” and that it “worked exactly as designed.” Executive Chairman Michael Saylor echoed similar comments.
Chanos fired back, asking, “What CEO, with a collapsing stock price, says that ‘the story of the day is that our junk bond is trading at par’?” mocking management’s emphasis on the stability of STRC. He has long been a prominent critic of Strategy’s business model.
In fact, Strategy’s financial situation is under significant pressure amid Bitcoin (BTC) weakness. Its Class A common stock has fallen more than 16% since the start of the year and has plunged over 60% over the past 12 months. The company’s current market capitalization stands at approximately $41.99 billion, while the value of its Bitcoin holdings is estimated at $48.17 billion, meaning the stock is trading at a discount to its net asset value.
Nevertheless, management is sticking to its existing strategy. Earlier this week, Saylor reaffirmed that the company would not sell even if Bitcoin were to drop to $8,000 and stated that it would refinance debt if necessary. He also emphasized that the company has enough cash runway to cover dividends and debt repayments for about 2.5 years without raising additional capital.
Chanos previously drew attention for an arbitrage strategy that involved shorting Strategy shares while buying Bitcoin. He argued that the company was trading at an excessive premium relative to the value of its Bitcoin holdings and predicted that the premium would be diluted if additional common shares were issued. However, he closed the hedge position last November, stating that “the trade had largely played out.”
*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses arising from its use. The content should be interpreted solely for informational purposes.*