MSTR's Preferred Stock Strategy as a High-Conviction Bitcoin Exposure Channel

MicroStrategy (MSTR) has redefined corporate treasury management by positioning Bitcoin as its primary store of value. As of November 2025, the company holds 641,700 BTC, representing over 3% of the total Bitcoin supply, according to a Coinotag report. To fund this aggressive accumulation, MicroStrategy has increasingly turned to preferred stock offerings, including the Variable Rate Series A Perpetual Stride Preferred Stock (STRC), STRK, and STRD. These instruments allow the firm to raise capital without diluting common shareholders, offering investors a unique hybrid of income generation and indirect Bitcoin exposure. This article examines how MSTR's preferred stock strategy balances capital efficiency, volatility mitigation, and long-term Bitcoin conviction.

Capital Efficiency and Bitcoin Accumulation

MicroStrategy's preferred stock strategy has enabled systematic Bitcoin purchases while preserving equity value. In late 2025, the company raised $50 million through preferred shares to acquire 487 BTC at an average price of $102,557 per coin, expanding its holdings to 641,700 BTC, according to a Coinotag report. This approach contrasts with traditional equity issuance, which dilutes common shareholders. For instance, the STRC "Stretch" series raised $26.2 million with a 10.5% annualized dividend rate, directly funding Bitcoin acquisitions, according to a Coinotag report. By leveraging preferred stock, MicroStrategy maintains a low average cost basis of $74,079 per BTC, according to a Coinotag report, creating a buffer against short-term price fluctuations.

The company's market-to-net asset value (mNAV) premium has compressed to 1.06x, the lowest in nearly two years, according to a Coinotag report, signaling a more disciplined valuation relative to its Bitcoin reserves. This compression reflects investor confidence in the firm's capital structure, as preferred stock issuance avoids the dilution risks associated with common equity. A planned $715 million euro-denominated preferred stock offering in 2025 could further accelerate Bitcoin accumulation, potentially marking the largest single purchase since the $2.46 billion acquisition in July 2025, according to a Blockchain Magazine report.

Risk-Return Profile: Preferred Stock vs. Direct Bitcoin Exposure

While Bitcoin's price volatility remains a concern, MicroStrategy's preferred stock offers a more stable income-generating alternative. From August 2020 to August 2025, a $10,000 investment in MSTR grew to $324,290, outperforming Bitcoin's $102,229 return over the same period, according to a IncomeShares report. However, MSTR's volatility (114%) exceeded Bitcoin's (65.6%), and its maximum drawdown of -81.1% during bear markets posed significant downside risks, according to a IncomeShares report. Preferred stock mitigates these risks by offering fixed dividend yields and lower correlation to Bitcoin's price swings.

For example, the STRC series provides a 10.5% annualized dividend, while STRK and STRD offer 8% and 10% non-cumulative yields, respectively, according to a Coinotag report. These instruments generate income for investors while aligning with MicroStrategy's Bitcoin treasury strategy. The company's Bitcoin yield for 2025 reached 26.1%, reflecting the success of its disciplined buying approach, according to a Coinotag report. Preferred stockholders benefit from this yield without bearing the full volatility of direct Bitcoin ownership or MSTR's common equity risks.

Challenges and Risks

Despite its advantages, MicroStrategy's strategy carries structural risks. The firm's balance sheet is heavily leveraged, with $15 billion in convertible bonds and preferred stock outstanding, according to a GuruFocus report. S&P Global Ratings has downgraded MSTR to junk status due to liquidity mismatches between Bitcoin-denominated assets and dollar-denominated liabilities, according to a GuruFocus report. If Bitcoin prices decline sharply, the company may face pressure to sell holdings at a discount or restructure debts, potentially triggering a liquidity crisis.

Additionally, MicroStrategy must service over $640 million in annual preferred stock dividends starting in October 2025, according to a GuruFocus report. While these obligations are manageable at current Bitcoin prices, a prolonged bear market could strain cash flows. The company's reliance on continuous capital raises also exposes it to market sentiment shifts. For instance, its mNAV premium has shrunk from over 300% to 126% since 2024, according to a Nasdaq report, reducing the premium investors are willing to pay for indirect Bitcoin exposure.

Conclusion

MicroStrategy's preferred stock strategy represents a high-conviction, capital-efficient approach to Bitcoin exposure. By issuing instruments like STRC, STRK, and STRD, the company balances income generation, volatility mitigation, and long-term treasury growth. While risks such as leverage and dividend obligations persist, the strategy's disciplined execution and low average cost basis position it for potential gains if Bitcoin's price rebounds. For investors seeking indirect Bitcoin exposure with reduced volatility compared to direct ownership or common equity, MicroStrategy's preferred stock offers a compelling, albeit complex, proposition.