Michael Saylor recently addressed the significant decline in Strategy’s stock and preferred shares with a statement posted on X.
Saylor remarked, “Volatility tests every capital structure. Strategy remains focused on Bitcoin, disciplined capital allocation, credit quality, and long-term value creation. We appreciate our investors and will continue to execute with transparency and resolve. $MSTR.”
This statement coincided with the occurrence of MSTR shares and STRC, Strategy’s variable-rate perpetual preferred, both reaching 52-week lows. MSTR has experienced a decline of over 80% from its all-time peak, while STRC, which holds a par value of $100, traded around $74—a 26% discount. This situation complicates the mechanism that funds Bitcoin purchases through preferred issuance, as the company cannot secure capital on favorable terms when instruments are trading at a discount.
On Wednesday, Bitcoin surpassed $58,000 for the first time since October 2024, pushing Strategy’s paper losses beyond $14 billion. The company currently holds 847,363 Bitcoin, with an average purchase price of $75,680 per coin—resulting in a loss exceeding $17,000 per coin at prevailing prices.
MSTR shares endured a decline of approximately 25% over five trading days leading into Friday, continuing their downward trend in pre-market trading as Bitcoin’s descent appeared to stabilize. The stock is trading at an mNAV below 1.0, indicating that the market values Strategy’s shares at a discount to the Bitcoin held on its balance sheet.
This situation is critical, as the company’s model relies on maintaining a premium: Strategy issues stock or preferred instruments above NAV, deploys proceeds into Bitcoin, and subsequently increases NAV per share. The absence of this premium constrains both capital sources simultaneously.
Further Strain on Strategy’s Cash Flow
The challenges facing the capital structure extend beyond Bitcoin’s price fluctuations. Annual dividend obligations on Strategy’s preferred instruments—STRC, STRK, STRF, STRD, and STRE—have escalated from $300 million at the start of 2026 to $1.2 billion, marking a fourfold increase within six months. Additionally, cash reserves have decreased by 38% this year, compressing dividend coverage from over seven years to approximately 14 months.
A Bloomberg report highlighted the intensifying scrutiny surrounding Saylor’s funding model, described as the most rigorous the company has encountered to date. CryptoQuant recently suggested that Strategy should halt Bitcoin purchases and focus on rebuilding cash reserves to $2.8 billion before resuming acquisitions.
In June, Strategy executed its first Bitcoin sale in four years, offloading 32 BTC at an average price of $77,135 per coin. Saylor characterized this transaction as evidence that the company could meet its dividend obligations through asset liquidation, though market reactions indicate that this framing may not have resonated positively.
Last week, Strategy acquired 520 Bitcoin—a fraction of its previous purchasing pace—and allocated $300 million from a $335.5 million equity raise into cash rather than Bitcoin. Saylor has yet to provide further details beyond the initial statement shared on X.
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