Ripple CEO Criticizes MicroStrategy Preferred Stock Trading 26% Below Par
MSTR•Ripple CEO Brad Garlinghouse labeled MicroStrategy's STRC preferred stock trading at $74, a 26% discount to its $100 par, a 'damning indictment' of the company's leveraged Bitcoin strategy. He noted MicroStrategy sold 32 BTC to fund $1.2 billion in annual dividend payments, reducing coverage from seven years to 14 months.
1. CEO Critique of Preferred Stock
Ripple CEO Brad Garlinghouse described MicroStrategy's perpetual STRC preferred stock trading around $74, 26% below its $100 par, as a damning indictment of the company's leveraged Bitcoin accumulation model. He contrasted bitcoin’s long-term utility with financial engineering focused on preferred shares.
2. Dividend Pressure Leads to Bitcoin Sales
Annual dividend commitments on STRC have risen to approximately $1.2 billion, narrowing coverage from more than seven years to about 14 months. In late May MicroStrategy sold 32 BTC—its first liquidation of bitcoin holdings—to fulfill these dividend obligations.
3. Broader Risks and Market Reactions
Investors are questioning STRC’s viability under sustained financial strain and the impact of reduced dividend coverage on MicroStrategy’s balance sheet flexibility. The critique underscores concerns over leverage-driven strategies and potential volatility in both preferred and common shares.
