Michael Saylor has built a career on testing how far conviction can bend markets—part financier, part preacher. Now the Strategy Inc. chairman is betting that same belief on what may be his riskiest financing experiment yet.
Over the years, Saylor has urged followers to pour their savings into Bitcoin, mortgage their homes, even “sell a kidney.” To admirers, he’s a prophet with a balance sheet; to skeptics, a showman with an obsession. Either way, he’s turned a once-obscure software company into the world’s largest corporate holder of Bitcoin, playing the markets with a conviction most executives would never dare.
Now, Saylor is asking for a different kind of leap of faith: embracing an unorthodox financing instrument— perpetual preferred stock—to shift away from common stock sales and convertible bonds that helped build a $75 billion Bitcoin war chest. The twist: these securities never mature and some can skip dividend payments, making them flexible for the issuer but unnerving for investors.
Branded “Stretch,” the latest issuance pays dividends with a variable rate and offers no voting rights. This kind of security is neither debt nor common equity, but Saylor hopes it combines advantages of both, giving him fresh cash to keep buying Bitcoin without heavily diluting shareholders. Over the next four years, he plans to retire billions in convertible notes, curtail common stock sales, and issue more preferred offerings as his main funding source.
The gamble is audacious: to create, as the firm puts it, a “BTC Credit Model,” where a volatile asset underpins a stream of income securities. If there’s big demand, he speculates it could even raise “$100 billion… even $200 billion” in theory. If not, Strategy, as MicroStrategy now calls itself, could be left juggling payouts with no buyers. Selling Bitcoin is a near-taboo, given Saylor’s ‘hold on for dear life’ gospel that coins are sacred. Supporters see the preferreds as a clever way to keep crypto buying; critics warn that the payouts are costly and could become a burden if Bitcoin’s price turns.
So far this year, the company has raised around $6 billion across four perpetual preferred offerings. The latest, a $2.5 billion “Stretch” tranche, ranked among the largest crypto capital raises this year, eclipsing Circle’s high-profile IPO. Nearly a quarter of the sale went to retail buyers, per a firm presentation, cementing Saylor’s devoted following as a key funding source.
“I have no past knowledge of any company doing this the way that MicroStrategy has just to capitalize on the retail fervor,” said Michael Youngworth, head of global convertibles and preferred strategy at Bank of America.
That retail tilt stands out in the corporate preferred market, dominated by investment-grade utilities and banks. Strategy is unrated, making its preferreds junior in the structure and outside the comfort zone of many fixed-income investors. If retail appetite fades, Saylor would need to win over insurers and pensions—the buyers he says he hopes to attract—or risk falling short of his blockbuster-fundraising ambitions.
Since the start of 2024, Saylor has raised over $40 billion through a mix of stock and bonds—$27 billion from common equity sales, $13.8 billion from fixed-income securities—transforming Strategy into a Bitcoin proxy for Wall Street. Part of the pivot is practical: the convertibles market excludes retail.
Strategy CEO Phong Le framed the shift as a way to build a more resilient capital structure—a contrast to 2022’s “crypto winter,” when the company was burdened by a Bitcoin-backed loan from Silvergate and other debt. “Over time, we may not have convertible notes,” he said, “we will be relying on perpetual preferred notes that don’t ever come due.”
Yet the plan depends on paying large, ongoing dividends in perpetuity, using an asset—Bitcoin—that produces no income and has historically lost half its value in months. If Bitcoin prices fall and investors lose interest, the company could be stuck with big bills and no easy way to raise fresh cash.
Perpetual preferreds don’t mature, and in some cases, dividends can be deferred without triggering default. Under current terms, Strategy can pay some obligations in cash or shares and certain payouts are non-cumulative, meaning missed payments don’t have to be made up. For now, payouts are financed largely by selling common stock through its at-the-market program—a stream Saylor has vowed to slow, but not shut off entirely. Still, the company has said it could sell shares even below its typical 2.5 net asset-value threshold, if needed to cover debt interest or preferred dividends.
Perpetual preferreds never have to be repaid, unlike convertibles, which either dilute shareholders if they convert or must be repaid in cash if they don’t. That matters because one of Strategy’s quietest advantages has been its ability to sell stock at prices well above the value of its Bitcoin holdings. It’s a gap Saylor himself dubbed the “mNAV premium” – a multiple of net asset value, helping Saylor raise cash and buy Bitcoin at a discount.
“With their mNAV premium compressing in recent weeks, I think management is rightfully concerned about creating too much dilution,” said Brian Dobson, managing director for disruptive technology equity research at Clear Street.
Still, the funding model brings its own hazards. “These are high-yielding instruments,” said Youngworth. “Paying coupons of 8% to 10% in perpetuity could be quite challenging.” Liquidity, a concern for any company with little operating revenue beyond security sales, could tighten sharply in a Bitcoin downturn.
To short seller Jim Chanos, the non-cumulative variety of preferreds are “crazy” for institutions to buy — perpetual, non-redeemable, with dividends paid only at the issuer’s discretion. “If I don’t pay the dividends, they are not cumulative. I don’t have to pay them back,” he told Bloomberg TV in June. Chanos says Strategy’s effective leverage has plateaued and sees the preferred push as another way to juice it. He’s suggested shorting the stock while long Bitcoin, betting the premium will collapse.
In Strategy’s capital structure, these units sit above common stock but are subordinate to convertible bonds, lacking the protections of regular debt. Wall Street managers have tended to favor those convertible bonds, which are easier to hedge through market-neutral trades. The preferreds are typically harder to hedge, and retiring convertibles would remove a popular arbitrage vehicle.
The whole approach works only if Bitcoin stays valuable and investor confidence holds. If he’s right, Bitcoin could inch closer to being treated as mainstream financial collateral. If he’s wrong, his balance sheet will be a cautionary tale: what happens when you try to turn a volatile asset into an income stream—and the market stops believing.
Still, the danger may come from the broader market as digital-asset treasury companies pile on risk.
“I think there are some indications of a bubble in crypto treasury companies,” said Yuliya Guseva, who directs Rutgers Law School’s blockchain and fintech program. “If the market appetite dries up, then the model will no longer persist.”
