MicroStrategy leans on preferred stock as its new go-to for big bitcoin buys
MicroStrategy (MSTR) used a different funding playbook last week — relying primarily on its STRC perpetual preferred stock to finance a huge bitcoin purchase — a signal the company’s capital strategy is shifting as it keeps accumulating BTC.
What happened
- MicroStrategy announced it bought 22,337 BTC in the prior week — the fifth-largest buy in the company’s history.
- Of the funds raised, $1.18 billion came from issuance of STRC perpetual preferred shares, which at the week’s average bitcoin price of about $70,000 equates to roughly 16,800 BTC.
- By comparison, its common-stock at-the-market (ATM) program raised $396 million — historically the main tool MicroStrategy used to buy bitcoin.
- MicroStrategy’s bitcoin holdings now total 761,068 BTC.
Why this matters
- STRC carries an 11.5% dividend. On the $1.18 billion issuance, that implies about $135 million in annual dividend payments, helping push MicroStrategy’s total annual dividend burden above $1 billion.
- The company says it has set aside roughly $2.25 billion in USD reserves to help meet these obligations, providing a buffer as capital costs rise.
- With MicroStrategy’s common stock down more than 70%, management appears motivated to limit further dilution. Using STRC lets the firm raise cash without issuing new common shares, reserving common equity issuance for moments when its multiple to net asset value (mNAV) is meaningfully above 1 or to top up USD reserves.
Early signs of stress in STRC pricing
- STRC has shown pressure in the market: it traded below its $100 par value for three straight days after the March 15 ex-dividend date, and its one-month volume-weighted average price is below par.
- The company may look to nudge STRC’s dividend up by another 25 basis points to help support the preferred’s price.
Bottom line
MicroStrategy is increasingly building its bitcoin position on a preferred-capital foundation rather than leaning primarily on common-stock issuance. That approach reduces dilution risk for existing shareholders but raises the company’s fixed dividend commitments — a trade-off MicroStrategy appears prepared to manage with USD reserves and careful use of equity going forward.
Read more: The math behind MicroStrategy’s path to 1 million bitcoin by the end of 2026.
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