Michael Saylor’s Bitcoin empire might be flying a little too close to the sun. Strategy—formerly MicroStrategy (MSTR)—has snapped up over 506,000 Bitcoin worth $44 billion, but its increasingly complex funding strategy may be setting up MSTR investors for pain.
Bitcoin Drop Pushes Strategy Close to the Red
The company’s average Bitcoin purchase price has climbed to $66,000. With Bitcoin down 20% since its $109,000 peak, a modest further slide would leave Strategy underwater. That’s raising questions about whether Saylor’s financial wizardry—funded through equity, convertible notes, and high-yield preferred stock—is sustainable.
Mounting Pressure From Dividends and Share Dilution
Strategy must now juggle dividend payments of 8% and 10% on its preferred stocks (STRK and STRF), plus interest on convertible debt. But its core software business generates little cash. That likely means more MSTR stock will be issued just to pay bills. As Quinn Thompson of Lekker Capital told CoinDesk, “He’s going to issue more shares and wreck the stock price.”
ETF Demand Props It Up—for Now
Two leveraged MSTR ETFs have pumped demand for the stock, but that might not last. “The music might stop someday,” said Thompson. If it does, the fallout could be sharp—and Saylor no longer holds controlling voting power. For now, Strategy’s balance sheet might look like a seesaw. But if sentiment flips, it could turn into a trapdoor.
Is MSTR Stock a Buy Right Now?
Analysts remain optimistic about MSTR stock, with a Strong Buy consensus rating based on 11 Buys and one Hold. Over the past year, MSTR has increased by more than 70%, and the average MSTR price target of $548.91 implies an upside potential of 81.9% from current levels.
