Few business topics are garnering more coverage than Michael Saylor’s unconventional strategy at Strategy, the software purveyor turned Bitcoin treasury outfit he still controls as top shareholder and Executive Chairman (the firm was formerly known as MicroStrategy). But one big shift has gone almost entirely unnoticed. As Bitcoin prices plunged, Saylor has attempted to remediate the situation by unleashing a torrent of new shares, the size of which has never before witnessed by a big market cap U.S. company. This immense dilution is keeping his Bitcoin stash growing as a point of pride—but dragging shareholders into dangerous territory.
Let’s examine the specifics. At the close of Q2 2020, shortly before Saylor started buying Bitcoin, today’s Strategy had 76 million shares of Class A common stock outstanding (it also has Class B harboring extra voting rights that are mostly owned by Saylor; I’ll use Class A since they account for all the issuance in the past six years.) As of February 12, the number stood at 314 million. That’s an increase of 4.13x or 313%. For all of the several hundred U.S. companies that today valued at over $10 billion, the one ranking closest to Strategy over the same span was home furnishings and decor seller Wayfair at 30% dilution, one-tenth the Saylor number. In third place is software provider Twilio at 27%.
Strategy pioneered a model based on constantly increasing the amount of Bitcoin its investors own per share, or its key metric of BPS (Bitcoin per share). Until this year when it also moved into preferreds in a big way, Strategy relied mostly on raising funds from equity offerings to amass the signature virtual currency. The process amounted to a kind of magical arbitrage: Strategy’s stock price kept increasing much faster than the price of Bitcoin. So by selling shares at what now look like highly inflated prices and buying ever more coins, Saylor could keep hiking the count every shareholder effectively “owned.”
Here’s an example. From the end of 2023 until mid-July of last year, Strategy shares jumped more than seven-fold, three times the Bitcoin climb of 2.8 times. At the start of the period, Saylor could buy about 1.5 Bitcoin by selling 1000 shares. But by the time Strategy’s market cap reached its summit just after Independence Day last year, it could purchase 3.8 tokens, or 150% more, selling the same amount of stock. For awhile, Saylor ran what was essentially an “accretion” machine. It bore some resemblance to the scenario where a financial engineer deploys a highly overvalued to keep issuing shares as a “currency” for making multiple acquisitions that raise its earnings-per-share.
And for a long time, it worked. When Strategy’s shares peaked in the summer of 2025, the accretion-via-dilution approach had raised the coins held for each 1000 shares from that 1.5 at the end of 2023, to 2.12, a rise of 41%. Well past mid-year, Saylor kept cranking on stock sales despite the worsening math. The investor presentation for Q4 boasts that Strategy towered as the “biggest raiser of common equity” in the U.S. for 2025, selling shares worth $16.5 billion to capture 6% of the total.
Then, the wheels came off. Since the apex, Strategy shares have fallen 72% from $457 to $130, far faster than Bitcoin’s 51% tumble from $129 to $68 (as of February 17). As a result, the accretion game no longer worked. Every time Saylor sells stock to buy Bitcoin now, instead of sweeting the mix, he’s watering it down. The vaunted BPS ratio funded by equity keeps dropping.
Still, Saylor’s not abandoning his holy grail. The investor presentation trumpeted that “Our business objective is increasing Bitcoin per share.” Why didn’t all the shares Saylor kept selling as his stock price tanked lead to big dilution in BPS? He offset that drag by reverting to different and dangerous scheme: Issuing tons of preferred stock. The investor presentation boasts that Strategy also reigned as America’s largest issuer of preferreds last year, collecting an additional $7 billion from the offerings or one-third of every dollar Wall Street raised. The huge influx of cash from preferreds has enabled Saylor to keep BPS more or less constant. Were he to keep selling stock as his prime funding method instead, he’d been transforming Strategy into a dilution machine, just the opposite of what he wants. Hence the lurching shift in financing.
The problem Saylor faces: He can no longer count on a soaring stock to keep the train rolling. Even before Strategy went big on preferreds, it had accumulated a large pile of debt that now stands at $8.2 billion. The preferred stock is paying junk rates at an average of over 10%, costing the company $888 million a year in dividends. Plus, Strategy will need to refinance $6 billion in debt in 2028, and guess how Saylor plans to do it? By issuing more shares in a campaign to “equitize” the borrowings.
But unless the stock soars again, the “equitizing” formula will keep undermining Saylor’s cherished, and heavily touted goal. Plus, the heavy debt load and the big payments for the preferred have rendered Strategy an extremely risky company. It’s already proven a lousy investment in the last two years, dropping by 30%.
Big dilution’s got a bad name. The major tech players from Apple to Microsoft consider it a matter of pride to keep shrinking their share counts. Michael Saylor took the opposite tack on steroids. Now, Saylor’s stuck. He can only pursue his vaunted game plan by taking on huge dividend payments that he’s paying from shrinking reserves since Strategy generates no cash. The more Bitcoin’s price drops, the more it looks like Saylor divided those holdings among too many shares. Now, his investors are paying the price for financing that Saylor claimed was super-cheap, and now looks extremely expensive.
