Michael Saylor, executive chairman of Strategy (previously known as MicroStrategy), is doubling down on his aggressive Bitcoin investment strategy by boosting the yield on the firm’s preferred shares. This move underscores his commitment to leveraging financial instruments to strengthen the company’s position as the largest corporate holder of Bitcoin.
According to recent disclosures, Strategy announced an increase in the yield of its Variable Rate Series A Perpetual Preferred Stock (ticker STRC), raising it by 25 basis points to 10.5%, effective in November. These shares are a key vehicle for the company’s funding strategy moving forward. The decision comes at a time when the firm is seeking to maintain its momentum amid shifting investor sentiment and market dynamics.
During a recent earnings call, Saylor acknowledged that the valuation premium Strategy’s stock once held over its Bitcoin holdings has been shrinking. As Bitcoin becomes a more mature and less volatile asset class, the market is recalibrating its expectations for Bitcoin-linked equities. This has weighed on Strategy’s stock price, which has declined roughly 45% since hitting an all-time high in November of the previous year.
Despite this downturn, the company reported a remarkable net income of $2.8 billion in the latest quarter, largely driven by unrealized gains from its Bitcoin reserves, now valued at approximately $70 billion. However, this surge in crypto profits hasn’t fully translated into increased investor confidence. The tepid response to recent preferred share sales has limited Strategy’s ability to raise fresh capital for additional Bitcoin purchases.
To counter this, Strategy is exploring new funding avenues, including international capital markets and the potential launch of exchange-traded funds (ETFs) backed by its preferred shares. CEO Phong Le highlighted these efforts during the earnings call, signaling the firm’s intent to innovate around its capital-raising mechanisms.
Earlier this year, Strategy had pledged not to issue new common shares at a valuation below 2.5 times its net asset value, except in cases where proceeds would go toward debt service or preferred dividends. However, Saylor remains open to selling equity when market conditions are favorable, particularly when the stock trades at a premium. This approach has sparked concern among some analysts, including Gus Gala from Monness Crespi Hardt & Co., who warned of potential dilution if the firm continues issuing new shares.
In the latest quarterly report, Strategy confirmed that it had refrained from issuing additional common stock through its at-the-market (ATM) program in the current month. The company reaffirmed its disciplined approach to capital management, even as it navigates fluctuating sentiment in the crypto markets.
A notable accounting shift has also added complexity to Strategy’s earnings reports. In January, the firm adopted a new standard requiring it to reflect the fair market value of its Bitcoin holdings in its financial disclosures. This has led to wild swings in quarterly results, including a $340 million loss in the same quarter a year earlier, followed by this year’s multibillion-dollar profit.
The broader context of Strategy’s maneuvering reflects a deeper trend in the corporate adoption of Bitcoin. While many firms have followed Saylor’s lead in integrating Bitcoin into their treasuries, the volatility of both the asset and the market’s perception of crypto-centric business models has introduced new challenges. Strategy’s response—raising yields, exploring ETFs, and selectively issuing equity—illustrates how companies are adapting to a maturing but still unpredictable crypto environment.
As Bitcoin continues to gain mainstream acceptance, institutions like Strategy are increasingly under pressure to demonstrate not only bold vision but also financial prudence. Saylor’s strategy highlights the balance between aggressive crypto accumulation and the need to maintain shareholder trust amid market volatility.
Furthermore, the tepid interest in Strategy’s preferred shares may signal a broader investor hesitation toward hybrid financial products tied to crypto assets. Institutional investors, while curious, remain cautious about exposure to instruments that combine traditional equity features with the inherent risk of digital currency fluctuations.
Looking ahead, Strategy’s success may hinge on its ability to innovate around capital structure while maintaining transparency and managing dilution risk. The potential launch of ETFs backed by preferred shares could open new pathways for retail and institutional investors alike, offering exposure to Bitcoin-linked assets without directly holding cryptocurrency.
Additionally, the firm’s ongoing engagement with international markets could diversify its investor base and provide more stable funding channels. As regulatory clarity improves in various jurisdictions, Strategy may find new opportunities to expand its footprint outside the U.S.
Saylor’s unwavering belief in Bitcoin as the future of value storage continues to drive Strategy’s corporate identity. While the market has responded with mixed signals, the company’s core thesis remains intact: that Bitcoin will outperform traditional assets over the long term. Whether this conviction will translate into sustainable shareholder value depends on the firm’s ability to navigate short-term headwinds with strategic agility.
In summary, Strategy’s increased yield offering is more than a financial lever—it’s a statement of resilience in a volatile market. As the company adapts to the evolving crypto landscape, all eyes will remain on how its bold Bitcoin bet plays out in the face of investor scrutiny and market unpredictability.