Strategy’s Balance Sheet Holds, but Capital-Raising Could Face Headwinds
Strategy (MSTR) is not at immediate risk of financial distress, but continued market weakness and Bitcoin’s decline could make future capital-raising more challenging. The company’s common stock has dropped nearly 70% from last year’s peak, prompting concerns about its ability to meet obligations.
Throughout 2025, Strategy has primarily relied on perpetual preferred stock to finance Bitcoin acquisitions, while using at-the-market (ATM) common share issuances mainly to cover preferred dividend payments.
Led by 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 trades just above the offer price.
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 Approaching Breakeven
Recent Bitcoin weakness has brought focus to the $74,400 level, where Strategy’s Bitcoin holdings would technically move into the red after five-plus years of accumulation. A drop below this level, however, 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. These notes, priced when MSTR traded at $130.85 with a conversion price of $183.19, are unlikely to be converted 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 Cover Dividends
Even if MSTR’s market valuation relative to its Bitcoin holdings (mNAV) declines further, the company has several levers to cover preferred dividends:
- Continue ATM common share issuance
- Sell small portions of its Bitcoin treasury
- Pay dividends in-kind with new stock
While dividends are not under immediate threat, using these measures could weaken investor confidence and temporarily limit the company’s ability to raise additional capital for Bitcoin purchases.
