MicroStrategy Unveils $1.25B Bitcoin Sales Plan, $2B Buybacks and 12% Dividend
MSTR•MicroStrategy authorized a $1.25 billion Bitcoin monetization program and $2 billion buyback plan, split evenly between common and preferred shares, while raising its STRC preferred dividend to 12% and earmarking $2.55 billion cash for 17 months of coverage. Shares rallied 13% on the capital framework announcement.
1. Digital Credit Capital Framework
MicroStrategy formally adopted a Digital Credit Capital Framework granting it the authority to sell up to $1.25 billion of Bitcoin to build cash reserves and fund operations. The framework also authorizes $2 billion in share repurchases, evenly split between common and preferred stock, to deploy during market dislocations.
2. Preferred Dividend and Reserve Policy
Under the new plan, the dividend on STRC preferred shares rises to 12% starting July, reflecting management’s focus on rewarding income investors. The company committed to holding at least 12 months of dividend and interest obligations in cash, currently amounting to $2.55 billion for approximately 17 months of coverage.
3. Equity Issuance and Bitcoin Purchase Rules
MicroStrategy will cease issuing common equity to buy Bitcoin when its share price approaches the value of its Bitcoin holdings, moving away from its previous perpetual issuance model. This change aims to prevent dilution and better align capital strategy with market valuations.
4. Market Reaction and Outlook
On implementation news, MicroStrategy shares jumped 13%, marking their strongest one-day gain in four months, as investors welcomed enhanced liquidity and capital flexibility. The framework is expected to fortify the company’s balance sheet and could set a precedent for managing corporate Bitcoin treasuries.
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