MicroStrategy Faces Securities Probe as Preferred Shares Yield 15.3%
MSTR•Saylor reaffirmed Bitcoin focus as Rosen Law Firm probed five securities for misleading statements. MicroStrategy holds 847,363 BTC at a $75,500 average cost while its preferred shares fell to $74 with a 15.3% yield, carrying $1.2 billion in annual dividends against a $1.4 billion cash reserve.
1. Securities Investigation Launched
Rosen Law Firm opened a probe into five linked securities issued by MicroStrategy, examining whether executives made materially misleading statements. The investigation raises the prospect of formal charges and regulatory action that could increase legal costs and investor uncertainty.
2. Bitcoin Holdings Under Pressure
MicroStrategy holds 847,363 BTC with an average acquisition cost of $75,500 per coin, compared with current Bitcoin prices below $60,000. The unrealized loss on its Bitcoin treasury has eroded the premium investors once paid for leveraged exposure.
3. Preferred Stock Dividend Strain
The company’s preferred shares dropped to $74, implying a 15.3% yield as annual dividend obligations reached $1.2 billion. With only $1.4 billion in cash reserves, investors are questioning the sustainability of the dividend model and the need for further capital raises.
4. Share Performance and Market Criticism
MicroStrategy shares hit a 28-month low, down over 80% from their peak. Critics, including Peter Schiff, argue the firm should sell Bitcoin to fund share buybacks, while others warn that funding constraints could force asset sales or dilution.
