Issuing Preferred Shares to Raise Funds for Continuous Bitcoin Acquisition
The company holds 580,000 bitcoins, valued at approximately $63 billion
However, analysts still question the reliability of this new plan
This company, which initially started as a software business and later transformed into a "Bitcoin reserve vault", is now aiming at the trillion-dollar corporate bond market under the name "Strategic Company" (formerly MicroStrategy).
On Tuesday, Michael Saylor, executive chairman of Strategic Company, introduced the latest financial engineering plan to the market: issuing $1 billion in preferred shares. He claimed this would usher in a "new era of Bitcoin-driven growth".
"We are the world's largest Bitcoin-collateralized credit instrument issuer," Saylor said in a Bloomberg interview, "This means we obtain financing without repaying principal, only paying dividends."
The raised funds will be entirely used to acquire more bitcoins.
What is the key mechanism? Saylor revealed: the company can discretionally suspend dividend payments.
A "Disturbing" Trend
Strategic Company currently holds 580,000 bitcoins, valued at approximately $63 billion, while the company's market value is about $120 billion.
Strategic Company's plan is just a "disturbing" microcosm of the corporate Bitcoin adoption wave - from Japan's Metaplanet to America's GameStop, more and more companies are getting involved.
History shows that claims of "perpetual rise" often ignore market realities.
— Eliezer Ndinga, 21Shares
Many enterprises are adopting similar strategies: issuing bonds, selling stocks, and then investing the funds into bitcoin.
Even Donald Trump's media group wants a piece of the action.
Saylor's New Plan
Unlike previous financing through convertible bonds of billions of dollars, this preferred share plan operates quite differently.
Preferred shares are between debt and common stock. Similar to bonds, preferred shares typically pay fixed dividends and usually have lower risk than common stocks.
However, debt has a clear maturity date (loan repayment period), while preferred shares do not.
Preferred shareholders typically do not have voting rights but enjoy dividend distribution priority over common shareholders.
Since preferred shares never expire, Strategic Company neither needs to repay principal nor face refinancing or liquidation risks like traditional debt.
Trillion-Dollar Market
For Saylor, this is not just an innovative financing tool - but a direct challenge to the approximately trillion-dollar corporate bond market.
The bond market provides large-scale financing channels for companies, but traditional corporate bonds usually have fixed terms and refinancing risks.
In contrast, Saylor has packaged preferred shares as a perpetual financing tool - never expiring, never needing repayment, and continuously providing funds for bitcoin acquisitions. He claims the plan has no drawbacks.
"If we can issue preferred shares with a 10% yield while bitcoin returns 57%, it means we're earning a 47% arbitrage space," Saylor stated, "which is essentially zero risk."
Value Reconstruction
Saylor hopes investors will break through the mindset of "valuing only based on bitcoin holdings" and instead incorporate the company's continuous financing and ability to create excess bitcoin returns into pricing considerations.
"To assess company value, one must calculate its ability to generate additional returns beyond bitcoin holdings," Saylor emphasized. Currently, the market seems to agree with this logic - Strategic Company's $120 billion market value is 91% premium over its $63 billion bitcoin holdings, and its declining software business cannot explain this premium.
"Pure Financial Nonsense"
Critics point out: dressed up, but fundamentally different.
"This is absolutely pure financial nonsense," legendary short seller Jim Chanos wrote on X platform. He is shorting the price spread between Strategic Company's stock (currently around $384/share, up 32% this year) and its bitcoin holdings (nearly $63 billion).
Chanos's core questioning is Saylor's valuation logic: "Mr. Saylor wants you to not only value based on bitcoin holdings net value but also apply a multiple premium to asset net value changes! Just because he can now leverage, haha."
NAV (Net Asset Value) represents the book value of assets held by a company. When a premium occurs (or value deviation), it means the stock price is disconnected from actual asset value. For example, Strategic Company's Japanese imitator Metaplanet - 10xResearch analysts point out that investors price each share equivalent to $596,146 per bitcoin, over five times its bitcoin market value.
Risk Disregard
Chanos uses an analogy to directly point out its absurdity: If someone's house value rises from $450,000 to $500,000, but claims a 20x multiplier should be applied to the $50,000 appreciation, making the property valuation $1.5 million - this logic completely ignores the inherent risks of continuously acquiring bitcoin with leverage.
"No investment is truly risk-free, despite Michael Saylor claiming MicroStrategy's new preferred share plan is," Eliezer Ndinga, strategic vice president at 21Shares, told DL News, "History proves that claims promising perpetual rise often disregard market realities."
Since Strategic Company started its bitcoin acquisition plan in 2020, despite bitcoin's significant price surge, its asset net value has remained highly volatile.
Premium Inflation
However, the company's valuation premium continues to inflate. "Despite experiencing multiple boom and bust cycles, Saylor's 'infinite money glitch' strategy has not significantly altered MicroStrategy's asset net value since substantially buying bitcoin in 2020," Chanos noted. Data shows that Strategic Company's current trading price is about 1.8 times its asset net value, while in 2020 this figure was over six times its bitcoin holdings value.
Will Saylor's grand vision of constructing a bitcoin-priced capital market become an undeniable transformative force, or validate the short sellers' correct judgment? The only certainty is that Wall Street and its skeptics are closely watching this high-stakes gamble.
