Peter Schiff contends that MicroStrategy has lost access to its primary funding channel for Bitcoin acquisitions, even as the company's Stretch preferred stock (STRC) has recovered to around $99.40.
Speaking on his October 2 podcast, Schiff credited weekly STRC buybacks and Bitcoin's price rally for the stock's recovery from a low of approximately $75 earlier in the year. However, he argued that the rebound has not reopened the company's ability to issue new Stretch shares for capital raising.
Shift in Funding Sources
MicroStrategy's weekly filings show the company last sold STRC through its at-the-market offering program between May 11 and 17, raising about $1.95 billion. No additional Stretch shares have been sold since that time, with remaining capacity holding steady at approximately $17.51 billion.
Since resuming Bitcoin purchases in late August after a 10-week pause, MicroStrategy has funded acquisitions through alternative channels. The company sold class A common stock (MSTR) to finance 4,603 Bitcoin in one week and 1,665 Bitcoin in late September. It also deployed $75.7 million from its USD cash account for an additional 950 Bitcoin during this period.
Cash Position and Dividend Support
MicroStrategy held a $5.02 billion USD reserve as of September 27, which the company designates to support preferred dividends and debt service. Schiff suggested the company has sufficient cash reserves to maintain dividend payments for an extended period but lacks the infrastructure to substantially increase Bitcoin purchases.
Executive Chairman Michael Saylor highlighted that STRC's 30-day historical volatility stood at 9% as of October 2, positioning it below the 10% volatility recorded for the SPDR S&P 500 ETF.
