Analysis: Michael Saylor's Bitcoin Flywheel Faces Fresh Doubts, Strategy's Preferred Stock Financing Model May Harbor a 'Death Spiral' Trap

Despite Bitcoin's recent decline weighing on Strategy (MSTR) stock price, the company's current market capitalization still carries a premium of approximately 31% over its net asset value. Analysts believe this premium previously stemmed from market recognition of Michael Saylor's "Bitcoin value-appreciation flywheel" model. However, as this model falters, the associated premium faces further compression risk.

According to calculations, Strategy currently holds approximately 844,000 Bitcoin, valued at around $51.1 billion at $60,500 per coin. Including its software business and cash assets, total assets amount to approximately $53.6 billion. After deducting liabilities including roughly $6.7 billion in convertible bonds and $15.5 billion in preferred stock, net assets attributable to common shareholders stand at about $31.8 billion. However, as of June 5, the company's market capitalization still reached $41.6 billion, exceeding net assets by roughly $10 billion.

Since 2025, Saylor has aggressively raised capital through preferred stock offerings to purchase Bitcoin, pushing the company's total debt and preferred stock obligations from approximately $6.9 billion to $21.8 billion. The preferred stock alone has reached $15.5 billion, requiring annual dividend payments of around $1.5 billion. Meanwhile, the company's cash reserves are only about $1 billion, making it difficult to sustainably cover these expenses over the long term.

Furthermore, Strategy's outstanding shares have increased from 98 million before its Bitcoin purchases to 353 million, a surge of 250%. Should Bitcoin's price fall to $50,000, its net asset value could drop to approximately $23 billion. Under the scenario where the premium disappears, MSTR's theoretical stock price decline could far exceed that of Bitcoin itself.

Analysts suggest that to cover the growing preferred stock dividends, Strategy may need to continuously issue more preferred stock or even sell off some of its Bitcoin holdings in the future. This could create a negative cycle of "issuing preferred stock—paying dividends—further financing," known as a "Death Spiral." (Fortune)