Mallers Critiques Perpetual Preferred Equity Model
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 20 2026
0mins
Source: stocktwits
- Perpetual Preferred Risk: Twenty One Capital CEO Jack Mallers stated that companies issuing perpetual preferred equity are essentially 'signing up to owe money forever', contrasting this with convertible bonds that can be retired through equity conversion, thereby alleviating financial burdens.
- Capital Structure Impact: Mallers emphasized that new perpetual preferreds like the Variable Rate Series A Perpetual Stretch Preferred Stock are non-callable and do not convert to equity, meaning companies will bear an interest burden of approximately 11.5% indefinitely, which could negatively impact their capital structure in the long term.
- Financial Engineering Challenges: Mallers outlined four options for Bitcoin treasury businesses facing underwater positions: selling Bitcoin, issuing dilutive common stock, discontinuing preferred dividends, or finding alternative cash flows to fund perpetual coupons, noting that each option adversely affects at least one stakeholder group.
- Cash Flow Alternatives: Mallers expressed a preference for generating cash flow through Strike's Bitcoin-backed loan business, which has a current addressable market of $20 billion to $30 billion and a long-term potential of $1 trillion to $2 trillion, indicating a strategic exploration of new business models.
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Analyst Views on MSTR
Wall Street analysts forecast MSTR stock price to rise
14 Analyst Rating
12 Buy
2 Hold
0 Sell
Strong Buy
Current: 100.770
Low
229.00
Averages
453.17
High
705.00
Current: 100.770
Low
229.00
Averages
453.17
High
705.00
About MSTR
Strategy Inc. is a bitcoin treasury and business intelligence company. The Company provides cloud-native, artificial intelligence (AI)-powered enterprise analytics software to thousands of global customers. Its Software Business segment is engaged in the design, development, marketing, and sales of enterprise analytics software platform through cloud subscriptions and licensing arrangements and related services. Its Strategy ONE platform provides access to AI-powered workflows, unlimited data sources, cloud-native technologies, and performance to speed up time from data to action. Strategy One delivers visualization, reporting, and embedded analytics capabilities across retail, banking, technology, manufacturing, insurance, consulting, healthcare, public sector, and others. Its Strategy Mosaic is a universal intelligence layer that provides enterprises with consistent definitions and governance across data sources, regardless of where that data resides or which tools access it.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Dramatic Distribution Decline: MSTY's weekly distributions have plummeted from $4.42 monthly in 2024 to just $0.1549 today, highlighting the fragility of its income sources and prompting investors to reassess their strategies.
- Price Collapse Impact: MSTR's stock price has fallen approximately 75% over the past year, directly reducing MSTY's ability to distribute income, thereby increasing risk for investors, especially amid heightened market volatility.
- Yield Mechanism Analysis: MSTY employs a synthetic covered-call strategy by buying call options and selling put options to create a long position; however, MSTR's high volatility leads to unstable option premiums, affecting the sustainability of distributions.
- NAV Continues to Decline: MSTY's net asset value has dropped 31% year-to-date and approximately 70% over the past year, indicating that in a sustained market downturn, the fund's recovery potential is severely constrained, necessitating caution from investors regarding its income-generating capabilities.
See More
Michael Saylor: Bitcoin Needs 3.3% Annual Growth to Fund Dividends
- Bitcoin Appreciation Requirement: Michael Saylor emphasized that Bitcoin must appreciate at an annualized rate of 3.3% to indefinitely fund dividends on Strategy's Variable Rate Series A Preferred Stock, highlighting the critical nature of this requirement under the current capital structure.
- Historic Bitcoin Sale: Strategy recently sold 3,588 Bitcoin for approximately $216 million, marking the largest single Bitcoin sale in the company's history, with proceeds allocated to pay preferred stock dividends and bolster cash reserves.
- Liquidity Buffer Analysis: As of July 2026, Strategy's liquidity buffer stands at approximately 2.2 years of expected preferred stock dividend payments and interest expenses, demonstrating the company's financial resilience in managing maturing obligations.
- Market Sentiment Shift: Despite proactive capital management, MSTR's stock price fell over 3% on Tuesday and continued to decline in pre-market trading, indicating growing market concerns regarding the company's future performance.
See More
Circle Internet Group Shares Plunge 44.6% Amidst Competitive Threats
- Stock Volatility: Circle Internet Group's shares plummeted 44.6% in June 2026, with a single-day drop of 17.6%, primarily driven by heightened market concerns over its core business, especially with the looming threat of the new competitor, Open USD stablecoin.
- Increased Competitive Pressure: The launch of Open USD stablecoin, backed by financial giants like Visa and BlackRock, is expected to directly capture market share from Circle, which currently holds approximately 26% of the market, second only to Tether.
- Index Removal Impact: Circle's stock was removed from five Russell indexes, leading to reduced demand from passive funds, which exacerbates the downward pressure on its stock amidst fragile cryptocurrency market sentiment.
- Uncertain Future Outlook: Although Circle continues to operate one of the most trusted stablecoins globally, its competitive moat is diminishing, prompting investors to watch how the company responds to the Open USD challenge, with potential strategies including partnerships or service expansion.
See More
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- Stock Plunge: Circle Internet Group's stock plummeted 44.6% in June 2026, primarily driven by Bitcoin's decline and the emergence of new competitors, reflecting the high volatility of the crypto market and investor panic.
- Increased Competition: While Circle's USD Coin remains the second-largest stablecoin, it faces direct threats from the Open USD stablecoin, which is backed by financial giants like Visa and BlackRock, potentially eroding Circle's market share.
- Index Removal Impact: The removal of Circle's stock from five Russell indexes has led to a decrease in passive fund demand, exacerbating the downward pressure on the stock, especially amid the current fragile sentiment in the crypto market.
- Uncertain Future Outlook: Although Circle continues to operate one of the most trusted stablecoins globally, its competitive moat is shrinking, prompting investors to watch how the company responds to the Open USD challenge, which may require partnerships or business expansion to maintain its market position.
See More
Strategy's Bitcoin Monetization Plan Raises Eyebrows
- Bitcoin Sale Shift: Earlier this year, Strategy sold 32 Bitcoins, a notable shift from its previous stance of never selling, with management claiming the sale was to 'inoculate the market', indicating a significant change in strategy.
- Liquidity Enhancement Plan: On June 29, Strategy unveiled a Bitcoin monetization program aimed at 'enhancing liquidity, preserving long-term Bitcoin exposure, and supporting long-term value creation for shareholders', showcasing its adaptability to market conditions.
- Financial Support Measures: The program allows the company to sell some cryptocurrency holdings to fund a USD reserve, pay dividends or interest expenses, or repurchase digital credit securities or common stock, reflecting flexibility in financial management.
- Stock Volatility Risk: Despite maintaining Bitcoin as its 'primary treasury reserve asset', the stock has plummeted 75% over the past year, and with ongoing volatility in digital assets, future financial performance is expected to remain under pressure.
See More
Strategy Unveils New Bitcoin Selling Strategy Amidst Stock Decline
- Bitcoin Monetization Plan: On June 29, Strategy unveiled a Bitcoin monetization program aimed at enhancing liquidity and supporting long-term shareholder value by potentially selling some Bitcoin, marking a significant shift from its previous stance of never selling.
- Deteriorating Financial Condition: Over the past 12 months, Strategy's stock has plummeted 75%, with the company incurring $12.8 billion in losses against $490 million in revenue, highlighting the severe impact of digital asset volatility on its profitability.
- Lukewarm Market Reaction: Although the company claims to still regard Bitcoin as its primary treasury reserve asset, its strategic shift may disappoint crypto enthusiasts and is unlikely to significantly improve its investment outlook.
- Uncertain Future Outlook: With Bitcoin down 28%, Strategy's stock performance remains bleak, and analysts have little reason to anticipate a recovery anytime soon, prompting investors to exercise caution regarding potential investments in the company.
See More
