For a while, Strategy's playbook was simple: Sell stock, buy Bitcoin, and trade at a premium to its holdings. That playbook has increasingly come under pressure.

The company formerly known as MicroStrategy is looking to convince investors that it can afford to pay dividends on its yield-paying preferred shares. Its Stretch preferred stock, which trades under the ticker STRC, has become its primary vehicle for funding Bitcoin purchases, but the price of that equity has been sliding further and further from its par value of $100.

When Strategy adopted Bitcoin as its primary treasury reserve asset in late 2020, it relied on its own balance sheet. But that plan quickly scaled, leading the company to aggressively tap into debt markets by pioneering the use of convertible bonds specifically earmarked for buying the world's largest cryptocurrency.

At-the-market equity offerings introduced a powerful virtuous cycle. When Strategy stock traded at a premium to its net asset value, the company would sell new shares into the open market. The cash raised was immediately used to buy more Bitcoin, boosting the value backing each existing share and spinning the wheel again.

The most consequential change came in January 2025, when the company introduced preferred stock offerings, allowing it to tap into a massive pool of institutional and retail capital that mandates fixed or high-yield cash income.

The company unveiled a new financial framework on Tuesday, adapting to a prolonged slump in its Stretch preferred, which touched a record low below $74 last week. When STRC trades near or above its $100 par value, the company can easily raise capital by issuing new shares to buy Bitcoin. But with the price sliding, that fundraising engine has stalled.

The company now has authorized up to $1.25 billion in Bitcoin sales to bolster its $2.55 billion USD reserve -- a capital pool strictly locked down to fund annual dividend and interest obligations.

The development marks a clear departure from the longtime "buy and hold" method touted by Chairman Michael Saylor, who co-founded the company in 1989 and led its transformation into a crypto whale from a software provider.

While Saylor repeatedly has urged followers to "HODL" -- a reminder to weather market volatility by never selling -- Strategy has signaled that its priorities have shifted.

CEO Phong Le, who took the helm in 2022, clarified last month that the company would sell Bitcoin "when it is advantageous to do so," adding, "We are not going to sit back and just say we will never sell the Bitcoin."

On Monday, Phong claimed the company was "evolving from one-way capital issuance to active capital management." The subtext is clear: Strategy, famous for being the world's largest corporate holder of Bitcoin, is moving beyond its identity as a mere treasury company.

The company rattled investors when it executed its first-ever strategic Bitcoin sale -- outside of a single transaction for tax purposes in 2022 -- at the end of May. With Strategy now trading at a narrow premium to its net asset value, further liquidations are becoming increasingly likely.

As of Tuesday, Strategy's market multiple of net asset value, or mNAV, hovered around 1.04. A value above 1 indicates Strategy is trading at a premium to the value of its Bitcoin holdings, but this gap is shrinking.

As scrutiny intensifies, the company must convince investors that it can service its dividend payments, considering its legacy software business brings in comparatively little revenue as Bitcoin dominates its balance sheet.

Though it may seem like a radical pivot, the framework isn't a radical change, according to TD Cowen analyst Lance Vitanza. The analyst had previously expected Strategy to selectively sell Bitcoin to support dividends "where appropriate." Still, the move formalizes Bitcoin as a flexible source of capital alongside equity issuance and preferred stock financing, Vitanza noted.

The company has increasingly broken from its usual habit of buying Bitcoin each week, taking a pause in the six days ended June 28. As of Monday, its holdings stood at 847,363 Bitcoin purchased for $64.1 billion, or an average of $75,651 apiece.

Citi Research analyst Peter Christiansen described Strategy's new approach as "buying more time." The financial overhaul also includes provisions for a $1 billion common stock buyback program and a bump in STRC's annual dividend to 12% from 11.5%.

As Christiansen sees it, the move gives Strategy time for Bitcoin's price to stabilize. The world's largest cryptocurrency by market capitalization recently fell below $60,000, breaching Strategy's average purchase price for its holdings.

Moreover, the new framework reduces risk to Strategy's credit issuer rating and reinforces its preferred stock funding channel by increasing its coupon. However, Christiansen expects the expanded USD reserve and the potential for future Bitcoin sales to pressure the company's Bitcoin yield and mNAV potential in the near term.

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

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June 30, 2026 12:08 ET (16:08 GMT)

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