Strategy's financing model through preferred shares is raising serious concerns among investors. Jeff Dorman, Chief Investment Officer at Arca, stated in a post on X that the situation at Strategy has "spiraled out of control." According to him, the company's approximately $15 billion in preferred shares imposes an obligation to pay $1.5 billion in dividends annually. This is reported by reported by.
Dorman warned that if market conditions remain volatile, managing this structure will become increasingly difficult. Currently, the price of Bitcoin (BTC) is 16% lower than at the beginning of the year, trading at around $73,737. This raises the question of whether the company's capital structure, tied to Bitcoin assets, can withstand long-term price fluctuations.
The expert believes that Strategy's model was based on the assumption that the price of Bitcoin would rise sharply to cover future obligations. The company has issued five types of preferred shares—STRK, STRF, STRD, STRC, and STRE—each with different dividend terms and risk levels. Dorman called the company's decision to repurchase bonds maturing in 2029 "incomprehensible."
The situation suggests that the company may only have two options left: selling Bitcoin to pay dividends or suspending dividend payments. Both scenarios could have negative consequences for investors and the Bitcoin market. Strategy CEO Phong Le confirmed that the company may sell Bitcoin in the future, but emphasized that the total volume of assets and the amount of Bitcoin per share will continue to increase.
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