MicroStrategy Spends $176M Buying Back Preferred Stock Over Bitcoin

MicroStrategy (NASDAQ: MSTR) spent $176.3 million buying back its own preferred stock, STRC, rather than purchasing Bitcoin this week. The company's last BTC purchase is already underwater.

The move follows a 10-week pause in Bitcoin purchases during which MicroStrategy sold about 7,000 BTC at $59,000 to $64,000 before buying 4,603 coins at an average of $80,318 between August 24 and 30. The company has now directed the entire $176.3 million toward STRC, its variable-rate perpetual preferred stock.

The repurchased STRC is trading below its $100 par value, which reduces the amount of preferred stock outstanding and cuts future dividend payments. MicroStrategy is also using existing cash rather than issuing more shares, so the buyback does not add to the dilution pressure on MSTR holders. With the $3.75 billion USD Reserve left intact, management can argue that it is improving the capital structure without taking money set aside for preferred dividends and interest.

The company has built its investment case around accumulating Bitcoin, so another period with no new BTC purchases raises questions about where management sees the best return on its available cash. The latest 4,603 BTC purchase is already below its $80,318 entry price, while the separate $1.0 billion MSTR repurchase authorization was left untouched.