Analysis: Michael Saylor's Bitcoin Flywheel Questioned, Strategy's Preferred Stock Financing Model May Have a "Death Spiral" Trap

Odaily News Despite the recent decline in Bitcoin dragging down the stock price of Strategy (MSTR), the company's current market capitalization still has a premium of approximately 31% over its basic net asset value. Analysts believe this premium stems from the market's past recognition of Michael Saylor's "Bitcoin appreciation flywheel" model. However, as this model becomes ineffective, the related premium faces further compression risks.

According to calculations, Strategy currently holds approximately 844,000 Bitcoins, valued at around US$51.1 billion based on a price of US$60,500 per coin. Adding the software business and cash assets, total assets amount to approximately US$53.6 billion. After deducting liabilities such as approximately US$6.7 billion in convertible bonds and US$15.5 billion in preferred stock, the net assets attributable to common shareholders stand at about US$31.8 billion. However, as of June 5th, the company's market capitalization was still US$41.6 billion, about US$10 billion higher than its net asset value.

Since 2025, Saylor has been financing Bitcoin purchases on a large scale by issuing preferred stock. This has increased the company's total debt and preferred stock obligations from approximately US$6.9 billion to US$21.8 billion. Among this, the preferred stock scale has reached US$15.5 billion, requiring annual dividend payments of about US$1.5 billion. Meanwhile, the company's cash reserves are only approximately US$1 billion, making it difficult to cover these expenses over the long term.

Furthermore, Strategy's number of outstanding shares has increased from 98 million shares before the Bitcoin purchases to 353 million shares, a 250% increase. If Bitcoin's price falls to US$50,000, its net asset value could drop to around US$23 billion. In a scenario where the premium disappears, the theoretical decline in MSTR's stock price could far exceed the decline in Bitcoin itself.

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