MicroStrategy Sells $1.44B Stock to Fund Preferreds as MSTR Plunges and Recovers
MicroStrategy (MSTR) sold about $1.44 billion of common stock to create a cash reserve to fund preferred-share dividends, a reserve the company says currently covers roughly 21 months of payments with a target of at least 24 months. The capital raise followed an overnight drop in Bitcoin (BTC) and coincided with a steep intraday decline in MSTR — as much as ~12.5% and a 15‑month low, and roughly a 40% decline over the past month — before a short-covering rebound that limited the close-day loss. MicroStrategy also added 130 BTC last week (net spend ~$11.7m), keeping its large bitcoin position intact. Management trimmed 2025 BTC assumptions and financial targets after the sharp BTC fall: year-end BTC guidance was lowered to $85,000–$110,000 (from $150,000), bitcoin yield targets and dollar gain targets were reduced, and full‑year net income guidance was broadened to a range from a $5.5 billion loss to a $6.3 billion gain. Critics argue the share sale is dilutive and signals a shift toward holding cash/Treasuries to meet dividend obligations rather than prioritizing BTC accumulation. Traders should note the likely reduction in short‑term liquidation risk for MicroStrategy’s BTC position but also heightened concern about dilution, dividend sustainability and negative shareholder sentiment — factors that can increase MSTR volatility and may amplify Bitcoin price moves during periods of stress. Primary keywords: MicroStrategy, MSTR, Bitcoin, BTC, capital raise, preferred dividends.
Bearish
The news is bearish for Bitcoin in the near term. MicroStrategy’s $1.44B stock sale to fund preferred dividends reduces immediate pressure to liquidate BTC holdings, which removes one direct forced-seller overhang. However, the move signals a more conservative, cash-first stance from a major corporate BTC holder and highlights dividend and dilution risks that weaken investor confidence. Management’s lowered 2025 BTC assumptions and broader net-income guidance reflect reduced upside expectations for BTC. Market reaction — a sharp MSTR sell-off, large recent BTC drawdowns and critical commentary — increases volatility and heightens downside risk during stress periods. In short-term trading, expect elevated volatility and potential downward pressure as sentiment shifts. In the longer term, the reduced liquidation risk is neutral to slightly positive, but sustained negative sentiment and potential future dilution could keep downside risk for BTC higher than before.