Strategy’s Balance Sheet Holds, but Capital-Raising Prospects Face Hurdles

Strategy (MSTR) is not on the verge of financial collapse, but recent market weakness is raising questions about its ability to easily raise new capital unless conditions improve. As Bitcoin has tumbled and Strategy’s common stock has plunged nearly 70% from last year’s peak, calls from skeptics for potential liquidation have grown louder.

Throughout 2025, Strategy has leaned on perpetual preferred stock as its primary financing vehicle for Bitcoin acquisitions, while using at-the-market (ATM) common share issuance mainly to cover preferred dividend obligations.

Led by Executive Chairman Michael Saylor, the company issued four U.S.-listed preferred series this year:

• Strike (STRK): 8% fixed dividend, convertible into common stock at $1,000 per share.
• Strife (STRF): 10% fixed non-cumulative dividend, senior-most in the preferred structure.
• STRD: 10% cumulative dividend, junior in rank.
• Stretch (STRC): debuted at $90 in August, 10.5% fixed cumulative dividend, now trading just above offer price.

As of Nov. 21, STRK trades near $73 (11.1% current yield), down 10% from issuance. STRD has fallen to $66 (15.2% yield, 22% total return loss). STRF remains above issue at $94, reflecting its seniority.

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Near Breakeven on Bitcoin Holdings

Bitcoin’s recent slide has put focus on the $74,400 mark, where Strategy’s Bitcoin holdings would technically move into the red after more than five years of accumulation. However, falling below this level does not trigger margin calls or require forced sales of Bitcoin.

The first significant structural pressure point is almost two years away, on September 15, 2027, when holders of the $1 billion 0.625% convertible senior notes can exercise their put option. The notes, priced when MSTR traded at $130.85 with a conversion price of $183.19, are unlikely to be converted given the current stock price around $168. Holders would likely seek cash repayment, which could require Strategy to raise funds or liquidate assets unless the stock rises significantly before 2027.

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Multiple Options to Maintain Dividends

Even if the market valuation of MSTR relative to its Bitcoin holdings (mNAV) falls further—or even drops below—Strategy still has several options to cover its annual preferred dividend obligations:

• Continue ATM common share issuance
• Sell small portions of its Bitcoin treasury
• Pay dividends in-kind using newly issued stock

While preferred dividends are not under immediate threat, using any of these measures could dent investor confidence, likely pausing or curtailing efforts to raise new capital for additional Bitcoin purchases, at least temporarily.