MicroStrategy Incorporated announced a new U.S. dollar reserve of $1.44 billion, funded by proceeds from a sale of class A common stock under its at‑market offering program. The reserve is earmarked to support dividend payments on the company’s preferred stock and to cover interest on outstanding debt for at least the next 12 months, with a plan to extend coverage to 24 months as liquidity improves.
The move comes as Bitcoin prices have fallen sharply, sliding below $90,000 in late November and continuing to decline into December. Because MicroStrategy’s stock price is tightly correlated with Bitcoin, the company’s leveraged Bitcoin strategy has attracted scrutiny. The reserve provides a buffer against short‑term market volatility and signals to investors that dividend obligations can be met even if Bitcoin holdings decline further.
MicroStrategy’s debt load is significant: the company reports approximately $4.5 billion in outstanding debt, with annual interest payments near $300 million. Preferred stock obligations total roughly $1.2 billion, with a 5.5% dividend rate. The $1.44 billion reserve therefore covers more than the full annual interest expense and provides a cushion for preferred dividend payments, addressing concerns about the company’s ability to service debt and meet shareholder returns under stressed market conditions.
Market reaction to the announcement was muted, with analysts noting that the reserve does not alter the company’s Bitcoin holdings but does reflect a cautious stance amid a steep decline in Bitcoin prices. The reserve also underscores the risk of index exclusion, as a significant drop in the company’s market net asset value could trigger forced Bitcoin sales under the company’s “never sell” policy. By establishing the reserve, MicroStrategy signals that it is preparing for potential liquidity constraints while maintaining its long‑term Bitcoin strategy.
The reserve is part of a broader capital‑raising plan that includes equity and debt issuances between 2025 and 2027 to acquire additional Bitcoin. Management emphasized that the reserve is a defensive measure rather than a shift away from Bitcoin, stating that it “will better position us to navigate short‑term market volatility while delivering on our vision of being the world’s leading issuer of digital credit.”
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