Analysts warn the firm’s cash reserves have dropped sharply, leaving dividend coverage at just 14 months and triggering a 17.5% decline in its preferred stock.
MicroStrategy faces pressure to halt bitcoin purchases after its cash reserves fell 38% this year, reducing dividend coverage from seven years to 14 months. The firm’s $10.6 billion paper loss on bitcoin holdings has strained liquidity, analysts said.
The company’s STRC preferred stock, designed to trade at $100, dropped to $82.50 last week, a record 17.5% below par. Annual dividend obligations surged to $1.2 billion, while cash reserves dwindled, raising concerns about sustainability.
Analysts recommend rebuilding reserves to $2.8 billion before resuming systematic bitcoin accumulation, citing overextension risks amid market volatility.