It's gut-check time for Michael Saylor's Strategy.
The slow-motion crash of cryptocurrencies has weighed heavily on the company, which snapped up tens of billions of dollars in bitcoin as digital assets spiraled to new highs. Bitcoin's retreat has hammered the company's stock price, leaving Strategy with a dwindling number of options to raise more cash.
Such is the level of stress that Strategy's turnaround plan, unveiled Monday, includes abandoning Saylor's mantra: "Never sell your Bitcoin." Strategy authorized plans to buy back as much as $1 billion each of its preferred and Class A common shares, and is launching a $1.25 billion "monetization program" to raise capital with bitcoin sales. Saylor has argued he never said his company wouldn't sell bitcoin.
"The longer-term story hasn't changed," said Jeff Dorman, chief investment officer at crypto asset manager Arca. "Each part of the capital structure is still in competition with other parts, but they've effectively kicked the can down the road for a while."
Saylor's bold idea to transform his software company into a bitcoin-storage vessel captured the imagination of crypto investors and spawned dozens of copycats. At first, Strategy relied on the cash on its balance sheet to add bitcoin. To amp up its buying spree, the company started selling stock. But then Strategy doubled down again, turning to other funding sources: convertible bonds and high-yielding preferred shares.
By the time bitcoin touched its record high above $126,000 in early October, Saylor had stockpiled more than 600,000 of the digital tokens and delivered on his promise to remake Strategy into a proxy for the currency itself. And now that bitcoin has lost more than half its value, recently breaking below the psychologically important $60,000 line, Strategy is hurting, too.
Strategy's mNAV, or its enterprise value divided by the value of its bitcoin holdings, dipped below 1 on Friday -- another "breaking the buck" moment that shook investors' confidence in the company. In other words, investors had valued Strategy less than its bitcoin stash -- effectively freezing Strategy's ability to issue new common shares to buy more bitcoin.
The company's common shares are down by more than 80% since peaking in November 2024, and Stretch, its biggest and most-popular preferred stock, is trading 16% below its par value after hitting a record low last week.
The former is bad news; selling more common shares of a stock in free fall would dilute existing shareholders and push the price even lower. But the latter is arguably worse. With its preferreds trading at a discount, Strategy would struggle to issue new preferred capital. What's more, the decline forced the company to raise its already hefty annual dividend of 11.5% to 12% in a bid to bring back investors.
Investors and analysts say Strategy can't protect both its common and preferred shareholders while also servicing a $1.8 billion annual dividend obligation on its preferred stocks -- a cash requirement that vastly outstrips its core software revenue. To keep paying the dividends, it must either sell more common equity, unload more bitcoin or cut the preferred dividend, they say.
The company is already pulling these levers. On Monday, Strategy unveiled plans to buy back as much as $1 billion each of its preferred and Class A common shares. Buybacks can provide a lift to stock prices by reducing the supply of shares available to trade, while also reducing the amount paid out in dividends.
Strategy also said it might sell bitcoin to raise as much as $1.25 billion in cash to help cover the dividend payments on its preferred stock and the interest on outstanding debt, as well as to fund its share-repurchase program and cash reserve. The company also boosted this cash reserve to $2.55 billion as of June 28.
Saylor, the company's co-founder and executive chairman, began transforming his software-intelligence company into a bitcoin hoarder in August 2020.
He initially tapped the company's cash on hand to fund its first bitcoin acquisitions. Soon, he began selling common shares through the at-the-market offerings. In 2024, Strategy became one of the largest global convertible bond issuers, raising more than $6.2 billion in a single year to fund its bitcoin buying spree.
In early 2025, Strategy expanded its financing playbook once again by launching a suite of high-yield preferred shares with names like Strike, Stretch, Strife and Stride.
Nick O'Neil, a crypto content creator based in Miami, said he holds about $21,000 worth of Stretch and plans to buy more if the preferred stock dips further.
"What you really are buying it for is because you think bitcoin will go up again in price," O'Neil said. "And you think that the bitcoin that they have on their books will be sufficient to pay the dividend yield for at least the next few years."
Earlier this month, Strategy sold a portion of its bitcoin holdings to cover dividends obligations for its preferred stock. The transaction, while small at just 32 bitcoin, hurt investor confidence and precipitated a swift market pullback. Strategy still owns 847,363 bitcoin worth about $51 billion based on current prices.
Some critics have called out how Saylor has pitched Stretch as a product with "money market-like stability" to investors. They argue that framing Stretch as a stable, high-yield "money market" alternative played down its inherent risks. Unlike a traditional money-market fund, Strategy can legally pause the yield or dividend on its preferred stocks. Yet in one ad on Saylor's social-media feed, a woman was lounging on a tropical beach, supposedly funding a lifestyle entirely through Stretch dividends.
"Strategy remains committed to bitcoin as its primary treasury reserve asset," Saylor said in Strategy's Monday announcement.
Some individual investors saw the crash coming and structured trades to profit from it.
John Scargall, a musician based in Philadelphia, said he bought two long-dated put options on Stretch earlier this month after seeing how investors were talking about Stretch on social media as if it were a safe money-market fund. Puts give investors the right but not the obligation to sell a security at a preset price by a preset deadline.
He snatched up two cheap contracts for $240 in total and has already cashed out one of those contracts for $320. He plans to hold the other contract until its expiration date in December but might sell the contract for profit if Stretch drops into the $50 to $60 range before then.
"The stock market gives you 10% to 11% a year with a ton of volatility, so how could something that's yielding 11.5% give you none," said Scargall. "I figured it was only a matter of time until an investment that's yielding 11.5% is going to start acting like an actual high--yield instrument."
Analysts trace the genesis of Stretch's current distress to May, when Strategy tapped its cash reserve to repurchase $1.5 billion in zero-coupon convertible senior notes due in 2029. The buyback reduced the funds available to cover preferred dividend obligations, sending shares of Stretch into a tailspin.
The resulting market skepticism persisted even after Strategy's CEO Phong Le said last Monday that he has purchased $1 million worth of Stretch shares and pledged to hold them until they reclaim par value.
Still, insider buying can't fix a macro meltdown. With bitcoin hovering near $60,000 and Strategy sitting on a $10 billion-plus unrealized loss on its bitcoin stash, some analysts think the company should pause its bitcoin purchases and rebuild its cash reserves.
"'Strategy always buys the local top' has become a genuine market meme. Buying whenever capital is available is not a strategy -- it is a formula for accumulating at cycle peaks," wrote Julio Moreno, head of research at crypto data firm CryptoQuant, in a recent note.
Write to Vicky Ge Huang at vicky.huang@wsj.com
(END) Dow Jones Newswires
June 29, 2026 20:20 ET (00:20 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments