- Strategy’s finance chief is leaving. Chief Financial Officer Andrew Kang told the company on Oct. 26 that he intends to resign for personal reasons and will step down effective Nov. 5, Strategy said in a filing, adding that the decision was “not the result of any disagreement” over its operations, policies or practices. Kang will stay on as an adviser through Dec. 31.
- The exit landed alongside record results. Strategy reported about $21 billion in third-quarter operating income, a record, said it has raised $21 billion in capital so far this year, and held 848,517 bitcoin as of Oct. 25, a 26% increase since the start of the year. At bitcoin’s Friday price of about $77,300, that stack is worth roughly $65.6 billion.
- The finance role will be split. Starting Jan. 1, Reza Virasteh, executive vice president of operations, will become co-principal financial officer alongside President and CEO Phong Le, who will oversee the finance organization during the transition. Le keeps responsibility for bitcoin strategy, capital markets, treasury and investor relations, while Virasteh will mainly manage the finances and budget of Strategy’s software business.
- The stock took a beating on a rough day for crypto. MSTR fell 6.4% in premarket trading, was down 11% shortly after the open and was about 12% lower by mid-morning, as the $6.3 billion Binance hack and a tech selloff hit crypto-linked stocks. Strategy’s STRC preferred stock was flat at $99.45.
What Happened?
Strategy, the largest corporate holder of bitcoin, disclosed Kang’s resignation in a filing on Thursday alongside its third-quarter results. The news hit as the wider crypto market slid, with bitcoin down 3.3% over 24 hours early Friday and later falling to near $76,800 after Binance reported an estimated $6.3 billion hack, according to CoinDesk. Coinbase, which reported underwhelming third-quarter results on Thursday night, fell 12% alongside Strategy.
Why It Matters?
Strategy’s model of buying bitcoin depends heavily on raising money in capital markets, which is why a CFO change draws attention, even though the company stressed there was no disagreement behind it. Keeping capital markets and treasury under Le should limit disruption to the fundraising engine that brought in $21 billion this year. Some analysts see the selloff as overdone: Cantor Fitzgerald’s Ramsey El-Assal said he expects Strategy, Coinbase and Robinhood to recover once the initial panic over the Binance hack fades, adding, “We would be buyers on weakness.”
What’s Next?
Kang’s last day as CFO is Nov. 5, and the co-principal financial officer structure starts Jan. 1. Investors will watch whether Strategy keeps up its pace of bitcoin purchases and capital raising through the leadership change and the market turmoil. Compass Point analysts are watching bitcoin’s $75,000 to $77,000 range, warning that a break below it could put the recent rally at risk, which would weigh on MSTR given its large bitcoin holdings.
