MSTR stock trades below mNAV as firm eyes more preferreds

How MicroStrategy (MSTR) perpetual preferred stock funds Bitcoin with limited dilution

MicroStrategy is leaning on perpetual preferred stock to add Bitcoin while limiting dilution to common shareholders. The company raises U.S. dollars by selling preferreds that carry dividend obligations and sit senior to common equity, then deploys the proceeds into BTC rather than expanding the common share count.

Compared with issuing common shares or convertible debt, perpetual preferreds function more like equity-like funding with a contractual carry cost. They can reduce incremental dilution when common stock trades near or below the firm’s economic value, shifting the trade-off from share count expansion to an ongoing dividend expense that is transparent to the capital structure. Recent offerings have included multiple series that market participants identify as STRC, STRK, STRF, and STRD.

Why modified NAV (mNAV) and MSTR stock premium drive outcomes

A useful lens for outcomes is modified NAV (mNAV), an equity-style measure that adjusts the value of Bitcoin and cash for debt and preferred obligations, then divides by common shares. When MSTR trades at a premium to mNAV, raising capital and deploying into BTC can be accretive to common equity; at a discount, the same actions can be neutral or dilutive after factoring dividend costs.

Analysts often frame the inflection around the relationship between the preferred dividend rate and the implied return embedded in MSTR’s premium to mNAV. After positive reception to a junior perpetual series, “highly accretive” to common shareholders is how Lance Vitanza, managing director at TD Cowen, characterized one offering.

According to CoinDesk, the STRC perpetual preferred recently returned to its $100 par during a Bitcoin downturn, a level that can reopen capacity for additional BTC purchases if issuance resumes. The price action in preferreds is a real-time signal of funding availability and cost, which in turn feeds into whether new raises are likely to add or subtract value versus mNAV.

Immediate impact: issuance plans, dividend buffer, S&P Global Ratings concerns

As reported by BeInCrypto, MicroStrategy plans to expand perpetual preferred issuance while MSTR trades below net asset value amid Bitcoin weakness. In practice, that suggests the company is prioritizing a funding instrument that can curb common dilution while keeping dry powder for opportunistic BTC accumulation.

According to CoinGape, CEO Phong Le aims to use STRC-style offerings to moderate volatility in the common while purchasing more Bitcoin, and the company has built a U.S.-dollar cash reserve of roughly $1.44 billion to cover at least 21 months of preferred dividends, targeting more than two years. This buffer is designed to reduce the probability of forced BTC sales to meet near-term obligations during adverse markets.

S&P Global Ratings has warned that reliance on external capital and preferred issuance to meet dividend and debt-service needs weakens the financial profile, with the credit rating remaining in junk territory. That assessment underscores the central risk of a strategy that depends on market access: if preferred dividend yields rise or investor appetite fades during a drawdown, liquidity could tighten just as carry costs persist.

At the time of this writing, Bitcoin trades near $67,239, and MSTR’s recent performance shows double-digit declines over the past month and year. These figures provide context for funding windows, preferred pricing, and the mNAV premium or discount that ultimately governs whether new issuance is favorable to common holders.

Phong Le’s plan and S&P Global Ratings: what it signals

The CEO’s blueprint emphasizes continued use of perpetual preferreds, across series such as STRC, STRK, STRF, and STRD, to finance incremental Bitcoin while managing common-stock dilution and volatility. The plan signals a deliberate tilt toward instruments that broaden the investor base across income-oriented and equity-upside profiles without committing to fixed maturities.

Reflecting institutional appetite for this structure, Jeff Park, portfolio manager at Bitwise, called STRK “a near-perfect instrument,” highlighting the blend of yield, potential equity participation, and no hard maturity. That reception suggests preferreds can serve as a scalable bridge between traditional income capital and Bitcoin-tied exposure.

The signal for investors and counterparties is twofold: mNAV and the MSTR premium remain the gating variables for accretion, while the cumulative dividend stack is the carry that must be serviced through cycles. If BTC weakness compresses the premium for an extended period, the calculus tilts toward preservation of liquidity; if the premium endures, preferred issuance can fund additional BTC with limited common dilution.