By Mackenzie Tatananni

Strategy has proven it is back to buying Bitcoin after causing a stir with its first sale in years. But that controversy is the least of its problems.

The company formerly known as MicroStrategy disclosed Monday that it had snapped up 520 Bitcoin in the preceding week for an average price of $67,068 each, or $3.4 million in total. The transaction brings Strategy's total holdings to 847,363 Bitcoin acquired for roughly $75,651 apiece.

Strategy broke from Chairman Michael Saylor's "never sell" mantra by executing its first-ever tactical Bitcoin sale at the end of May. The only other sale in the company's history was strictly for tax purposes.

However, attention has shifted to a separate challenge involving sales of MicroStrategy's "Stretch" preferred stock, which trades under the ticker STRC. Benchmark analyst Mark Palmer, a longtime Strategy bull, noted Monday that the company's share price remained under pressure last week as investors focused on a sharp decline in the price of STRC preferred stock.

That creates a major headache for Strategy, which relies on STRC as its primary vehicle to fund Bitcoin acquisitions. Last Thursday's selloff dragged the preferred stock down to $82.53, spiking its effective yield to 14%.

At that rate, the market is treating the company's funding mechanism like risky junk debt. This skepticism comes despite MicroStrategy aggressively issuing more than $10 billion of the stock in less than a year, a spree that forced it to hike the coupon seven times to a hefty 11.5%.

The combined dividend obligations on MicroStrategy's various preferred shares are substantial -- a heavy burden for a company whose legacy software business generates relatively little revenue, leaving its massive Bitcoin hoard to dominate the balance sheet.

Shareholders are worried Strategy could dilute their ownership by selling more stock to service dividends. But Palmer believes the STRC selloff fueled "alarmist commentary" that was "fundamentally misguided."

When STRC trades around or exceeding its target price of $100, Strategy can easily generate capital by issuing new shares to buy more Bitcoin, Palmer noted. Conversely, if the stock drops significantly below that level, this process loses momentum, causing the company's cryptocurrency purchases to decelerate.

"There is a meaningful difference between stating that Strategy's preferred stock funding engine has become less efficient and asserting that the company's overall model is broken, as some of its detractors have suggested," the analyst argued.

As Strategy bought Bitcoin last week, it simultaneously sold 2,714,839 shares of common stock for gross proceeds of $335.5 million. The company announced a new $21 billion offering of common stock in March, leaving it with a staggering $25.4 billion in total stock still available to dump onto the market.

Strategy shares rose 5%. The Stretch preferred stock gained 2%.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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June 22, 2026 09:59 ET (13:59 GMT)

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