Strategy (MSTR) Stock: Michael Saylor’s Bitcoin Bet Goes Red But Here’s The Twist

TLDR

• Bitcoin’s drop below $76,037 put Strategy’s 712,647 bitcoin holdings briefly underwater, but created no immediate financial stress for the company.
• The main impact is that Strategy’s stock now trades at a discount to its bitcoin holdings, making new share issuance less attractive and slowing future bitcoin purchases.
• Strategy holds all bitcoin unencumbered with $2.25 billion in cash reserves and flexible options for managing $8.2 billion in convertible debt, with first put date not until Q3 2027.
• Strategy increased its Stretch (STRC) preferred stock dividend by 25 basis points to 11.25% for February as STRC trades below par at $98.99.
• Bitcoin has since rebounded to around $78,000 after briefly dropping below Strategy’s cost basis over the weekend.

Bitcoin dropped below $75,500 over the weekend, pushing the price just under Strategy’s average purchase cost of about $76,037 per coin. This put Michael Saylor’s firm technically underwater on its bitcoin position for the first time in a while.

But here’s the thing: this doesn’t create any real financial emergency for the company. Strategy holds 712,647 bitcoin, and none of it is pledged as collateral. That means there’s zero risk of forced selling just because the price dipped below what they paid.

The company has $8.2 billion in convertible debt on its books. That sounds like a lot, but Strategy has plenty of options to manage it. They can extend maturities, convert debt to shares when notes come due, or use other tools like perpetual preferred shares to retire debt. The first convertible note put date isn’t until the third quarter of 2027.

Strategy also sits on $2.25 billion in cash, reserved for dividend payments on its preferred stock offerings.

Where The Real Pressure Shows Up

The actual impact hits Strategy’s fundraising strategy. The company has historically funded bitcoin purchases by selling new shares through at-the-market offerings. This works by instructing brokers to sell shares at current market prices instead of dumping a large chunk at a discount.

But this only makes sense when the stock trades at a premium to its net asset value. That’s the metric comparing market cap to the real-time value of bitcoin holdings. Last Friday, when bitcoin sat around $89,000 to $90,000, Strategy traded at about 1.15 times its bitcoin value.

Now with bitcoin in the mid-$70,000s, that premium has flipped to a discount. This makes new equity raises less attractive because issuing shares would dilute existing shareholders without getting premium value.

Back in 2022, Strategy’s shares traded below bitcoin holding value for most of the year. During that time, the company only added about 10,000 bitcoin to its stack. That’s the real consequence here.

Preferred Stock Gets A Boost

Strategy announced it’s raising the dividend on its Stretch preferred stock by 25 basis points to 11.25% for February. This marks the sixth increase since STRC started trading in July 2025.

STRC is a perpetual preferred stock that pays monthly cash distributions. The dividend rate adjusts each month to keep the stock trading near its $100 par value and limit volatility. STRC closed Friday at $98.99, slightly below par.

The company describes Stretch as a short-duration, high-yield savings account. Strategy has raised $2.25 billion in reserves to cover dividend obligations on its perpetual preferred offerings, which total about $887 million annually.

Bitcoin has rebounded since the weekend dip and recently traded near $78,000.

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