MicroStrategy Preferred Stock Trades 16% Below Par as Bitcoin Buying Faces Pause
MSTR•MicroStrategy shares hit a two-year low as its perpetual preferred stock traded near $84, about 16% under par, driving annual dividend obligations above $1.2 billion. Analysts warn the company should pause Bitcoin acquisitions—despite holding 847,363 BTC worth $53 billion—and raise about $2.8 billion in cash reserves.
1. Stock Slump and Funding Pressure
MicroStrategy’s common stock fell to a two-year low on June 24, closing near $103.84 after a 5% drop as Bitcoin’s retreat intensified scrutiny of its leveraged balance sheet and funding model.
2. Preferred Stock Discount and Dividend Obligations
Its variable-rate perpetual preferred shares (STRC) traded near $84, reflecting a roughly 16% discount to $100 par and lifting the effective yield to about 13.17%, while annualized dividend commitments topped $1.2 billion.
3. Call to Pause Bitcoin Purchases
Analyst Julio Moreno recommended pausing all Bitcoin acquisitions until cash reserves and dividend coverage are rebuilt, estimating the firm needs approximately $2.8 billion to restore 24 months of coverage.
4. Cash Reserves and Coverage Requirements
The company holds 847,363 BTC valued at $53 billion and reported cash reserves of $1.4 billion after a $300 million increase this month, leaving a funding gap that could constrain dividend and debt obligations if Bitcoin remains under pressure.
