Few enterprise matters are garnering extra protection than Michael Saylor’s unconventional technique at Technique, the software program purveyor turned Bitcoin treasury outfit he nonetheless controls as prime shareholder and Govt Chairman (the agency was previously referred to as MicroStrategy). However one huge shift has gone virtually fully unnoticed. As Bitcoin costs plunged, Saylor has tried to remediate the scenario by unleashing a torrent of recent shares, the scale of which has by no means earlier than witnessed by an enormous market cap U.S. firm. This immense dilution is retaining his Bitcoin stash rising as a degree of pleasure—however dragging shareholders into harmful territory.
Let’s study the specifics. On the shut of Q2 2020, shortly earlier than Saylor began shopping for Bitcoin, in the present day’s Technique had 76 million shares of Class A typical inventory excellent (it additionally has Class B harboring additional voting rights which can be largely owned by Saylor; I’ll use Class A since they account for all of the issuance prior to now six years.) As of February 12, the quantity stood at 314 million. That’s a rise of 4.13x or 313%. For the entire a number of hundred U.S. corporations that in the present day valued at over $10 billion, the one rating closest to Technique over the identical span was house furnishings and decor vendor Wayfair at 30% dilution, one-tenth the Saylor quantity. In third place is software program supplier Twilio at 27%.
Technique pioneered a mannequin primarily based on consistently rising the quantity of Bitcoin its buyers personal per share, or its key metric of BPS (Bitcoin per share). Till this 12 months when it additionally moved into preferreds in an enormous manner, Technique relied totally on elevating funds from fairness choices to amass the signature digital forex. The method amounted to a sort of magical arbitrage: Technique’s inventory worth stored rising a lot quicker than the worth of Bitcoin. So by promoting shares at what now appear like extremely inflated costs and shopping for ever extra cash, Saylor may hold mountaineering the rely each shareholder successfully “owned.”
Right here’s an instance. From the tip of 2023 till mid-July of final 12 months, Technique shares jumped greater than seven-fold, 3 times the Bitcoin climb of two.8 occasions. At first of the interval, Saylor may purchase about 1.5 Bitcoin by promoting 1000 shares. However by the point Technique’s market cap reached its summit simply after Independence Day final 12 months, it may buy 3.8 tokens, or 150% extra, promoting the identical quantity of inventory. For awhile, Saylor ran what was basically an “accretion” machine. It bore some resemblance to the situation the place a monetary engineer deploys a extremely overvalued to maintain issuing shares as a “currency” for making a number of acquisitions that increase its earnings-per-share.
And for a very long time, it labored. When Technique’s shares peaked in the summertime of 2025, the accretion-via-dilution method had raised the cash held for every 1000 shares from that 1.5 on the finish of 2023, to 2.12, an increase of 41%. Nicely previous mid-year, Saylor stored cranking on inventory gross sales regardless of the worsening math. The investor presentation for This fall boasts that Technique towered because the “biggest raiser of common equity” within the U.S. for 2025, promoting shares price $16.5 billion to seize 6% of the full.
Then, the wheels got here off. For the reason that apex, Technique shares have fallen 72% from $457 to $130, far quicker than Bitcoin’s 51% tumble from $129 to $68 (as of February 17). Consequently, the accretion recreation not labored. Each time Saylor sells inventory to purchase Bitcoin now, as an alternative of sweeting the combo, he’s watering it down. The vaunted BPS ratio funded by fairness retains dropping.
Nonetheless, Saylor’s not abandoning his holy grail. The investor presentation trumpeted that “Our business objective is increasing Bitcoin per share.” Why didn’t all of the shares Saylor stored promoting as his inventory worth tanked result in huge dilution in BPS? He offset that drag by reverting to totally different and harmful scheme: Issuing tons of most popular inventory. The investor presentation boasts that Technique additionally reigned as America’s largest issuer of preferreds final 12 months, accumulating an extra $7 billion from the choices or one-third of each greenback Wall Road raised. The large inflow of money from preferreds has enabled Saylor to maintain BPS roughly fixed. Had been he to maintain promoting inventory as his prime funding technique as an alternative, he’d been remodeling Technique right into a dilution machine, simply the alternative of what he needs. Therefore the lurching shift in financing.
The issue Saylor faces: He can not rely on a hovering inventory to maintain the practice rolling. Even earlier than Technique went huge on preferreds, it had collected a big pile of debt that now stands at $8.2 billion. The popular inventory is paying junk charges at a median of over 10%, costing the corporate $888 million a 12 months in dividends. Plus, Technique might want to refinance $6 billion in debt in 2028, and guess how Saylor plans to do it? By issuing extra shares in a marketing campaign to “equitize” the borrowings.
However except the inventory soars once more, the “equitizing” formulation will hold undermining Saylor’s cherished, and closely touted objective. Plus, the heavy debt load and the large funds for the popular have rendered Technique an especially dangerous firm. It’s already confirmed a awful funding within the final two years, dropping by 30%.
Huge dilution’s bought a foul identify. The key tech gamers from Apple to Microsoft take into account it a matter of pleasure to maintain shrinking their share counts. Michael Saylor took the alternative tack on steroids. Now, Saylor’s caught. He can solely pursue his vaunted recreation plan by taking over enormous dividend funds that he’s paying from shrinking reserves since Technique generates no money. The extra Bitcoin’s worth drops, the extra it seems to be like Saylor divided these holdings amongst too many shares. Now, his buyers are paying the worth for financing that Saylor claimed was super-cheap, and now seems to be extraordinarily costly.
