MicroStrategy Preferred Shares Trade 26% Below Par on Rising Dividend Burden
MSTR•MicroStrategy’s perpetual preferred shares (STRC) are trading around $74, 26% below $100 par, as annualized dividends reach $1.2 billion and coverage narrowed from over seven years to 14 months. The company sold 32 BTC in May to fund dividend payments, raising questions about the sustainability of its leveraged Bitcoin strategy.
1. Preferred Stock Discount and Dividend Pressure
MicroStrategy’s perpetual STRC preferred shares are trading near $74, about 26% below their $100 par value, as annualized dividend obligations have climbed to roughly $1.2 billion. Dividend coverage has narrowed dramatically from over seven years to approximately 14 months, intensifying investor concerns over funding sustainability.
2. Bitcoin Liquidation to Fund Dividends
In late May, MicroStrategy sold 32 BTC—the first such liquidation—to cover STRC dividend payments, highlighting strains on its leveraged financing model. The move underscores growing questions about the viability of using Bitcoin sales to service ongoing financial obligations.
3. Ripple CEO’s Critique and Bullish Stance
Ripple CEO Brad Garlinghouse described MicroStrategy’s leveraged Bitcoin accumulation as a “damning indictment” of financial engineering, yet affirmed his long-term bullish view on Bitcoin itself. He argued that utility, rather than leverage-driven models, will drive enduring digital asset value.
4. MicroStrategy’s Bitcoin Holdings in Context
MicroStrategy holds more than 843,000 BTC, representing about 76% of the Bitcoin on public company balance sheets, powering its treasury strategy. Investors are now weighing whether the company’s debt-fueled acquisition approach can sustain this position without further asset sales or financial strain.
