MicroStrategy, the publicly traded business intelligence company and the world's largest corporate holder of Bitcoin, has announced a significant shift in its capital structure. For the first time, the value of its preferred equity has surpassed its outstanding convertible debt. According to the company's latest report, preferred equity expanded to $8.36 billion, exceeding convertible debt levels of $8.214 billion.
The announcement followed a major $2 billion Bitcoin purchase, the company's largest in seven months. This strategic pivot is designed to give MicroStrategy more flexibility and "buy more time" to track Bitcoin market cycles without the constraints of debt maturity dates. The company has paused issuing new convertible debt and is now relying on a portfolio of preferred stocks with varying dividend yields and risk profiles.
STRC, MicroStrategy's most widely traded preferred share, has been central to this shift. Its trading volume has increased, with the price stabilizing in the $99 to $101 range in recent weeks, trading above its par value. STRC is promoted as a relatively low-risk, high-dividend instrument offering indirect exposure to both MicroStrategy and Bitcoin.
This capital restructuring directly addresses a key investor concern: refinancing risk. MicroStrategy has a series of debt maturities beginning in 2028. While the company states its Bitcoin holdings cover its obligations "many times over" at current prices, a significant BTC price drop could pressure creditors to demand repayment, potentially forcing asset sales. Preferred equity, which has no maturity date and requires no principal repayment, mitigates this risk, though it obligates the company to pay ongoing dividends.
The report also highlighted the company's substantial Bitcoin treasury. The broader "Playbook strategy" group of companies holds 867,258 BTC, with MicroStrategy's own treasury containing 709,715 BTC. Despite this strong position, the company's common stock (MSTR) has faced headwinds, trading near a six-month low around $160, impacted by dilution and worsened market sentiment, which has amplified recent Bitcoin price dips.
