Strategy’s Balance Sheet Stable, But Capital-Raising May Face Challenges
Strategy (MSTR) is not in immediate danger, but Bitcoin’s recent decline and the company’s common stock falling nearly 70% from last year’s peak could make future fundraising more difficult.
Throughout 2025, Strategy has mainly relied on perpetual preferred stock to finance Bitcoin purchases, while using at-the-market (ATM) common share issuances primarily to cover preferred dividends.
Under Executive Chairman Michael Saylor, the company issued four U.S.-listed preferred series this year:
- Strike (STRK): 8% fixed dividend, convertible at $1,000 per share.
- Strife (STRF): 10% fixed non-cumulative dividend, senior-most preferred.
- STRD: 10% cumulative dividend, junior preferred.
- Stretch (STRC): 10.5% fixed cumulative dividend, debuted at $90 in August and now trades just above that level.
As of Nov. 21, STRK trades near $73 (11.1% yield), STRD at $66 (15.2% yield), and STRF at $94, the only series above issuance.
Bitcoin Holdings Near Breakeven
Strategy’s Bitcoin holdings would technically move into the red around $74,400, but dipping below this level does not trigger margin calls or force sales.
The next structural pressure point is September 15, 2027, when holders of $1 billion in 0.625% convertible senior notes can exercise their put option. Priced when MSTR traded at $130.85 with a conversion price of $183.19, these notes are unlikely to convert at today’s stock price (~$168). Holders would likely seek cash repayment, potentially requiring Strategy to raise funds or liquidate assets unless the share price rises meaningfully before 2027.
Multiple Options to Maintain Dividends
Even if MSTR’s market valuation relative to Bitcoin holdings (mNAV) declines further, the company has several levers to cover preferred dividends:
- Continue ATM common share issuance
- Sell portions of its Bitcoin treasury
- Pay dividends in-kind with newly issued stock
While preferred dividends are not immediately at risk, using these options could weaken investor confidence and temporarily limit Strategy’s ability to raise capital for additional Bitcoin purchases.
