In recent months, uncertainty has surfaced around the operations and stock performance of Strategy, formerly known as MicroStrategy, under the leadership of its executive chair, Michael Saylor. Having redefined itself from a conventional business software firm to a dedicated bitcoin investment entity, Strategy made headlines when it pivoted its focus in August 2020. This strategic shift resulted in a remarkable 23-fold increase in shareholder value and positioned the company as a leader in promoting the concept of bitcoin treasury firms, inspiring over 170 other companies to adopt similar strategies.
Notably, Strategy has accumulated a staggering 640,000 bitcoins, which represents approximately 3% of the total bitcoin supply, firmly establishing it as a significant player in the cryptocurrency market. However, the company has recently faced challenges, particularly following the introduction of its ambitious 21/21 capital strategy aimed at raising a colossal $42 billion for further bitcoin acquisitions. Despite bitcoin’s increase of 22% in 2025, Strategy’s stock has only risen by 9%, creating a substantial tracking error that investors are increasingly concerned about.
Compounding these issues, recent disclosures in its Securities and Exchange Commission (SEC) filing reveal a troubling picture. The company reported a $22.1 million purchase of bitcoin at an average price of $113,048 and announced it had raised $128.1 million, mostly through the sale of common stock. However, the significant gap of approximately $106 million from the funds raised did not go towards bitcoin purchases. Instead, it is earmarked for dividend payments on various classes of perpetual preferred stock.
This financial maneuvering raises alarms about the sustainability and transparency of Strategy’s business model, which has shifted focus from generating revenues through software solutions to relying on the issuance of new shares. Critics argue that this represents a form of dilution, where common shareholders are effectively paying preferential dividends and shouldering the risk of the company’s obligations.
While Saylor and his supporters argue that this strategy creates a financial “flywheel” designed to enhance returns for common shareholders if bitcoin continues to rise, many investors are beginning to view this as a means of sidestepping the inherent risks of dilution and subordination. Consequently, as Strategy navigates these turbulent waters, potential investors find themselves making multifaceted bets—on bitcoin’s performance, the sustainability of its stock’s premium over net asset value, and the overall viability of a financial model dependent on continuous investment to fulfill its obligations.
