Strategy’s Preferred Shares Plunge 20% Discount to Par as Bitcoin Falls Under $60,000
MSTR•Strategy Inc.’s preferred shares fell to about $80, a record 20% discount to the $100 par value, while its common stock dropped below $100 for the first time since March 2024 as Bitcoin slid under $60,000. Dividend obligations have surged to roughly $1.2 billion annually, cutting cash runway to 14 months.
1. Share Price Declines
Strategy’s common shares have fallen below $100 for the first time since March 2024, reflecting a steeper leveraged response to Bitcoin’s drop under $60,000. Its variable-rate perpetual preferred stock is trading near $80, marking the widest discount to par since issuance.
2. Dividend Obligations Surge
Annual dividend commitments on the preferred stock have risen from about $300 million in January to roughly $1.2 billion today, while cash reserves have been drawn down by debt buybacks and small Bitcoin sales. As a result, the cash runway for dividend coverage has contracted from over seven years to around 14 months.
3. Strategic and Financial Challenges
Raising equity at depressed common share prices would be highly dilutive, and halting Bitcoin purchases has been recommended to rebuild liquidity. To restore two years of preferred dividend coverage, the company may need approximately $2.8 billion in additional reserves, potentially necessitating asset sales or dividend adjustments.
