Will Bitcoin’s Dive Threaten Michael Saylor’s Strategy?

Forbes

When your entire corporate game plan and the investor base you’ve cultivated revolves around the rising price of bitcoin, a 35% tumble in a month is cause for alarm.  Read the full story on Forbes: https://www.forbes.com/sites/ninabambysheva/2025/11/24/will-bitcoins-dive-threaten-michael-saylors-strategy/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, Will Bitcoin's Dive Threaten Michael Saylor's Strategy?

00:07Last week, Bitcoin fell to $82,000, down 35% from its $126,080 October peak.

00:16For most big NASDAQ-listed companies, that drop is background noise.

00:21For Michael Saylor's strategy, the stock market's biggest bull and largest corporate holder of Bitcoin,

00:27it immediately raises the question of what comes next.

00:31For almost two years, Strategy traded far above the value of its Bitcoin holdings,

00:36at times 190% higher, turning its stock into a turbocharged Bitcoin bet for most institutional investors.

00:45Saylor's transformation of his Tyson's Virginia-based data mining software company

00:49into a masterwork in using traditional corporate finance to harness Bitcoin's volatility

00:54has already attracted hundreds of copycats, publicly traded holding companies

00:59known as digital asset treasuries, or DEATS,

01:03while his net worth climbed from $1.6 billion in 2022 to $5.4 billion.

01:10But Strategy's premium has disappeared, and its own shares have fallen 60% in a year,

01:16bringing its market capitalization down to $49 billion,

01:21lower than the value of the $56 billion in Bitcoin it holds.

01:25Last month, S&P Global Ratings assigned Strategy a B- credit rating, deep into junk territory,

01:33citing, quote,

01:34JPMorgan analysts also warned in a recent note that Strategy is at risk of being removed

01:49from major benchmarks, including MSCI USA and the NASDAQ 100.

01:54If MSCI moves ahead, as much as $2.8 billion could flee the stock,

02:01with more at risk if other index providers follow.

02:05Passive funds tied to Strategy account for nearly $9 billion of exposure.

02:10A removal would not only force selling, but drain liquidity from a stock

02:14whose high trading volume has long been one of its main attractions for institutional investors.

02:19And while Strategy has met S&P 500 inclusion criteria for two straight quarters,

02:25it has not been added, and isn't likely given its Bitcoin woes.

02:30Saylor, ever the evangelist, is not retreating.

02:33Never mind equity, he says.

02:35His latest mantra, quote,

02:37The credit is the product and the equity is the afterthought,

02:40captures his belief that Strategy's future now lies not in being a Bitcoin tracking stock,

02:45nor in providing sophisticated traders with a place to hedge,

02:49but in building a new market.

02:51Bitcoin-powered income instruments attractive to investors

02:54who want yield rather than price swings.

02:57To do that, Strategy has spent the past year

03:00rolling out an unusual menu of perpetual preferred securities.

03:04These are preferred stocks that have no maturity.

03:07His new issues, totaling $8.6 billion,

03:11read like a set of characters from a comic book.

03:13Strike, strife, stride, stretch, and stream.

03:17But each is a different variation of the same idea.

03:21High, fixed dividends, backed by Strategy's Bitcoin-centered capital structure.

03:26Strike, trading under ticker STRK,

03:29pays an 8% annual dividend on a $100 stated amount, payable quarterly.

03:34Strife, or STRF, pays 10% annually and sits at the top of the preferred stack.

03:40Stride, or STRD, also pays 10% on a quarterly basis.

03:46Stretch, or STRC, introduced in July with an initial 9% dividend,

03:51pays monthly, with the rate adjusted each month to keep the price near its $100 par.

03:57Saylor's key selling point is that the dividends on Strategy's preferreds

04:01are being treated as, quote, return of capital,

04:04which means investors reduce their cost basis instead of paying taxes on the distributions each year.

04:10For taxable investors, that translates into a significantly higher effective yield

04:14than similar corporate preferreds.

04:17But the latest downturn in Bitcoin has hit Strategy's new preferreds.

04:22STRC now trades below its $100 par and yields roughly 11%.

04:26The euro-dominated STRE, announced earlier this month,

04:31fell below its 100 euro issue price in under two weeks.

04:35Its yield has gone from 10% to 12.5%.

04:38Investors are no doubt concerned about Saylor's ability to cover his interest costs

04:43in a prolonged Bitcoin bear market.

04:47Between preferred dividends and interest on its convertibles,

04:50Strategy now faces roughly $700 million a year in payments.

04:54For full coverage, check out Nina Bambasheva's piece on Forbes.com.

05:01This is Kieran Meadows from Forbes.

05:03Thanks for tuning in.

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