Bitcoin
Peter Schiff Claims MicroStrategy Has Lost Its Primary Bitcoin Funding Mechanism
Longtime critic Peter Schiff argues that MicroStrategy can no longer issue preferred shares to fund Bitcoin purchases, despite the company turning to common stock sales.
Gold advocate and longtime Bitcoin critic Peter Schiff stated on his October 2 podcast that MicroStrategy has lost the preferred stock issuance channel that previously funded its large-scale Bitcoin acquisitions. Schiff noted that while the company's Stretch (STRC) preferred stock has rebounded toward its $100 par value, trading near $99.4 after dropping to approximately $75 earlier this year, the recovery does not reopen its core fundraising mechanism.
Schiff attributed the price recovery in STRC to MicroStrategy's weekly share buybacks and a rally in Bitcoin, alongside potential short covering. He argued that Executive Chairman Michael Saylor will be unable to issue additional STRC shares to purchase Bitcoin, contending that the company only holds enough cash to cover upcoming dividend payments. In contrast, Saylor highlighted improved stability in the stock, noting on October 3 that STRC's 30-day historical volatility dropped to 9%, lower than the 10% recorded for the SPDR S&P 500 ETF.
Regulatory filings provide partial backing for Schiff's observations regarding preferred shares, showing that MicroStrategy last sold STRC through its at-the-market program between May 11 and 17, raising $1.95 billion, with its remaining capacity unchanged at $17.51 billion since. However, the company has continued to acquire Bitcoin by pivoting to other funding sources, selling Class A common stock (MSTR) to purchase 4,603 BTC in late August and an additional 1,665 BTC shortly after a summer pause.
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