MicroStrategy Shifts Funding Tactics Amid Market Pressure

Facing significant stock volatility, MicroStrategy Inc. has announced a pivotal change in how it plans to finance its substantial Bitcoin acquisitions. CEO Phong Le revealed the company will now prioritize the use of preferred shares over issuing additional common stock, a move directly aimed at shielding common shareholders from excessive price swings. The announcement contributed to a 5% decline in the common stock, which closed Thursday's session at $126.14.

The strategic pivot is made possible by a recovery in the company's own preferred equity. The ticker STRC recently climbed back to its $100 par value for the first time since mid-January. This threshold is operationally critical: it allows MicroStrategy to issue more of these preferred shares through "At-The-Market" (ATM) programs. The STRC shares carry a variable dividend, currently set at 11.25%, which is adjusted monthly—a structural feature designed to tether the price close to the $100 mark.

Management's core objective is to continue its aggressive Bitcoin accumulation strategy without further depressing the value of its common equity. Common shares have endured a difficult period, down 17% year-to-date and reflecting a 63% loss over the preceding 120 days. By leveraging preferred capital, the company seeks a less disruptive funding mechanism.

Earnings Disappointment Underlines the Shift

This financing overhaul comes against the backdrop of a disappointing quarterly earnings report. For the fourth quarter of 2025, MicroStrategy posted a loss per share of $42.93, missing analyst expectations. The operating loss reached $17.4 billion, primarily driven by unrealized losses on the company's massive Bitcoin holdings.

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Key Data Points:

• Stock Price: $126.14 (-5%)
• Bitcoin Holdings: Approximately 714,644 BTC
• Bitcoin Price: ~$67,500
• Q4 Revenue: $123 million
• STRC Dividend: 11.25% (variable)

Despite these substantial paper losses, the firm remains committed to its core Bitcoin treasury strategy. Its holdings of over 714,000 Bitcoin ensure a strong correlation between the company's share price and the cryptocurrency's market movements. CEO Phong Le has also recently dismissed market speculation about MicroStrategy acquiring other Bitcoin-holding companies, labeling such maneuvers a distraction from the primary goal of direct accumulation.

A Precarious Financing Bridge

The market's response to the new strategy has been mixed. While common shares fell, the preferred shares stabilized at their par value. In recent weeks, the company raised approximately $370 million through common stock sales and an additional $7 million via preferred share offerings.

However, the viability of this new approach remains fragile. Its success is inherently tied to Bitcoin's market performance. Should Bitcoin weaken significantly and push the price of STRC shares back below the $100 par value, the ATM issuance channel would be blocked. This scenario would force a return to potentially dilutive common stock offerings—the very method the company is now trying to avoid.