Strategy, continuing its Bitcoin buying spree, acquiring $2.1 billion worth of the cryptocurrency last week. This as the company's shares have fallen by nearly 60% in the last year. Joining me now, Fong Lee, Strategy CEO and President. Fong, it's great to talk to you again. Thanks for joining us.
Thanks for having me. Appreciate it.
So, why'd you guys keep buying? And and and why buy in a larger amount than you had been recently, especially as effectively your currency, that is your your shares, have been going down?
Yeah. Look, 2026 is going to be a big year for Bitcoin. It's going to be a big year for MSTR. And uh as a result, the best thing you can do as you go into a big year is to start to build a strong capital base. And that's what we've done, uh really over the course of the last few years, but we accelerated the last two weeks. The other big thing about 2026 is, uh it's going to be the coming out party for stretch, which is our preferred uh equity. Uh we launched it uh in the middle of last year. It's grown up to be over $3 billion dollars this year, and we think building a strong capital base with Bitcoin, a strong US dollar base, all those things are going to uh bode well for what's going to happen with Stretch over the course of 2026.
So, Stretch and your other um preferred share products that are yield producing instruments, they pay out cash dividends. Um, in order to pay out those dividends, Bitcoin price would be more helpful if it was going in an upward direction than in a downward. So, how do you sustainably pay those dividends without either selling Bitcoin or continuing to issue new shares?
Yeah, so a few things that we've done, right? We've built up a Bitcoin balance of about $65 billion dollars now. We've built up a US dollar reserve of $2.25 billion dollars. and that allows us to pay the dividends out over the course of the next 60 to 100 years. So we have now duration in terms of stretch. Uh in the short term, what needs to happen is Bitcoin needs to go up about 1 and a half percent a year for us to continue to pay our stretch dividends. Uh so it's not so much a concern about whether we can pay the stretch dividends. The question we have is how quickly can we grow stretch? And here we have to your point of product that uh is backed by Bitcoin, that is short duration money, uh that is low to uh very low volatility, right? Right now we're about 7% vol over the last couple weeks we've seen it go below 5% vol and it pays 11% tax deferred dividends. So my concern is less paying the dividends and how do we grow stretch over the course of the next year? How do we market it? How do we make sure everyone's aware that there's an option out there that gives people, whether you be low income, high income, low net worth, high net worth, uh you can get 11% on your money. And I think that's the unique feature that everyone is excited about.
Fong, have you guys turned so much towards Stretch because people aren't buying your actual equity at this point? I mean, as I mentioned, we've seen the big pull back. You're not trading at a premium to Bitcoin at this point. Um, and there are more options than ever for people to invest in cryptocurrencies.
No, the reason we turned towards stretch is we we've been a a levered Bitcoin company, right? And so if you think about leverage, what we've done over the last course the last four years is we've raged we we've raised uh capital primarily through convertible debt. And convertible debt is an illiquid over-the-counter market that uh has uh large spreads and isn't perfectly priced. And so we said, instead of of something that is an inferior product, let's go to a better form of leverage we call amplification. So, uh our equity, MSTR, is primarily there to build a capital base, but really it's our our our preferred product stretch, which is there to create leverage and amplification on the company. And and so that's why we've been focusing on stretch, not as an alternative to our equity, but as an alternative to debt instruments like convertible bonds, which are inferior.