MicroStrategy Doubles Down on Bitcoin Despite Recent Price Struggles

Core Insights - MicroStrategy is intensifying its investment in Bitcoin, with a current holding of $55 billion, just above its average purchase price [1] - The company has marked 2,000 days since adopting its "Bitcoin Standard," indicating a long-term commitment to Bitcoin [2] - The firm is facing significant pressure on its balance sheet, prompting a strategy to attract fresh capital [2] Financial Strategy - MicroStrategy's current Bitcoin holdings amount to 712,647 BTC, acquired at an average cost of $76,037 per coin, with Bitcoin trading around $78,000 [3] - To fund further Bitcoin purchases, the company has increased the dividend on its Series A Perpetual Stretch Preferred Stock (STRC) by 25 basis points, raising the yield to 11.25% [3] - The 11.25% payout is significantly higher than typical corporate bonds, reflecting the company's need for capital and the volatility of its Bitcoin-centric model [4] Capital Raising Mechanism - STRC has become a primary tool for capital raising, funding the acquisition of over 27,000 BTC since its launch in November [4] - The variable-rate security is part of a suite of fixed-income products, indicating a diversified approach to capital generation [4] Risks and Concerns - Critics highlight that the high cost of servicing the increased dividends could lead to cash-flow challenges, especially if Bitcoin prices stagnate or fall below the firm's average purchase price [5]