MicroStrategy's operations in the first quarter can be described as a tragedy:
Bitcoin purchased in the first quarter: 80,715 coins
Total expenditure: $7.66 billion
Average price: $94,922 per Bitcoin
Bitcoin price on the document submission date: approximately $76,400
The unrealized losses on the held Bitcoin in the first quarter exceeded $5.9 billion
Fortunately, the strategy increased its holdings between April 7 and 13, purchasing 3,459 BTC at an average price of $82,631, but this is only a small part of the risk.
What truly poses a risk to the market is the new preferred stock issued by the strategy, STRF—10% annual cash dividend new perpetual preferred shares.
It's important to note that MicroStrategy has a core issue:
Using non-cash-generating assets (Bitcoin) to pay off fixed, cash-required debts (bond interest, preferred stock dividends). The cash flow from its core software business is insufficient to cover these growing obligations, especially after issuing high-interest (10%) STRF preferred shares.
This mismatch makes the company exceptionally vulnerable when Bitcoin prices fall or remain stagnant, and during times of tight liquidity.
This has been viewed as a dangerous signal by some traditional institutions, for a simple reason: in the current macroeconomic environment, providing a fixed 10% cash dividend usually indicates financing difficulties or extremely high risk premiums for a non-financial or high-growth startup.
This implies that the market may perceive investing in this company as highly risky, requiring exceptionally high returns to compensate, which further exacerbates its cash flow pressure.
MicroStrategy is executing a gamble; if Bitcoin prices rise significantly in the coming years, and if (Micro)Strategy can successfully manage its debt, then Michael Saylor will be hailed as a "strategic genius."
But if the Bitcoin market enters a long-term bear market or faces a severe liquidity crisis, then this strategy could lead to catastrophic consequences, far more destructive than any previous black swan events.