MicroStrategy’s $15.5B Preferred Dividend Load Faces Test as Shares Jump 6.5%
MSTR•Arca CIO Jeff Dorman warned that MicroStrategy’s $15.5 billion perpetual preferred stock, carrying an 11.5% annual dividend obligation of roughly $1.5 billion, will be tested if Bitcoin prices stagnate. MicroStrategy shares jumped 6.5% while Bitcoin rose past $74,000, and retail investor sentiment improved to bearish from extremely bearish.
1. Arca CIO Warns of Imbalance
Jeff Dorman flagged that MicroStrategy’s holders of common stock, Bitcoin, and STRC preferred securities are now directly competing for limited economic value, predicting one will suffer significant losses within four months. He criticized the company’s financing model as untested against a prolonged flat or declining Bitcoin price environment.
2. Extensive Preferred Stock Obligations
MicroStrategy has issued roughly $15.5 billion in perpetual preferred stock, including STRC series yielding an 11.5% annual dividend, amounting to about $1.5 billion in yearly payout commitments. The firm’s legacy software operations generate modest cash flow, forcing it to rely on capital markets to fund both Bitcoin acquisitions and growing dividend liabilities.
3. Stock Gains and Market Sentiment
MicroStrategy shares climbed 6.5% during afternoon trading as Bitcoin rose past $74,000, marking over 1% gain in 24 hours. Retail investor sentiment shifted from extremely bearish to bearish, reflecting improved market confidence despite underlying structural concerns.
