MicroStrategy Preferred Stock Trades 26% Below Par, $1.2B Dividend Strain
MSTR•Ripple CEO Brad Garlinghouse called Michael Saylor's leveraged Bitcoin model a "damning indictment", pointing to MicroStrategy's preferred stock trading 26% below $100 par value and $1.2 billion in dividends. The company sold 32 Bitcoin in May to fund dividend payments, narrowing its coverage window from seven years to 14 months.
1. CEO Critique of Bitcoin Financing
Brad Garlinghouse called Michael Saylor's borrow-to-buy approach a "damning indictment", distinguishing between Bitcoin's long-term value and MicroStrategy's financing structure.
2. Preferred Stock Discount and Dividend Obligations
MicroStrategy's STRC perpetual preferred stock has fallen to about $74, roughly 26% below its $100 par value, while annualized dividends surged to $1.2 billion, shrinking the coverage window from over seven years to 14 months.
3. Bitcoin Sale for Dividends
In late May the company sold 32 Bitcoin to fund its preferred dividend, marking its first BTC liquidation for financial obligations and drawing scrutiny to its capital structure.
4. Potential Risks to MicroStrategy's Strategy
Investors question whether sustained dividend burdens and reliance on Bitcoin liquidation could stress MicroStrategy's balance sheet and valuation over time.
