From mNAV premium to a $100 billion vision: Michael Saylor's Bitcoin credit empire journey

Michael Saylor skillfully combines personal influence, market sentiment, and digital asset investment through financial innovation, creating an unprecedented path for corporate development. Article Author: Lesley Source: MetaEra

In the history of financial innovation on Wall Street, few have been able to transform personal beliefs into corporate strategy like Michael Saylor, thereby reshaping the entire industry's financing model. The chairman of Strategy (formerly MicroStrategy) is driving an unprecedented financial experiment: replacing traditional equity and debt financing with perpetual preferred stock to continuously "supply blood" for his aggressive Bitcoin accumulation strategy. According to Bloomberg, this year, Strategy has successfully raised approximately $6 billion from the market through four rounds of perpetual preferred stock issuance, with the latest issuance of perpetual preferred stock "Stretch" (STRC) reaching as high as $2.5 billion. Michael Saylor described STRC as Strategy's "iPhone moment," emphasizing its potential to open a scalable and low-volatility capital market access channel for the Bitcoin treasury. This originally obscure business intelligence software company has leveraged such a huge capital leverage simply based on its firm belief in Bitcoin. As of August 18, Strategy holds 629,400 bitcoins, with a total investment of 33.139 billion dollars, valued at over 72 billion dollars at current market prices.

More strikingly, in the latest perpetual preferred stock issuance, retail investors accounted for nearly a quarter — which is almost unimaginable in the traditional corporate preferred stock market. However, behind this financial engineering lies a radical evangelist who once urged fans to "sell a kidney to buy Bitcoin," along with an army of retail investors willing to follow his beliefs. To understand this financial experiment that could reshape the landscape of the digital asset industry, we need to start from the beginning. The story and mechanism of perpetual preferred stock Perpetual preferred stock is a type of hybrid financial security that has no fixed maturity date, combining the income certainty of bonds with the perpetual characteristics of stocks. The issuing company is not required to repay the principal but must pay agreed-upon dividends periodically, allowing the enterprise to use investors' funds indefinitely. From an investor's perspective, purchasing perpetual preferred stock is equivalent to obtaining a "perpetual income right"—the returns mainly come from continuous dividend income, rather than the principal recovery at maturity typical of traditional bonds. The table below compares the differences between perpetual preferred stock, convertible bonds, and common stock across several key dimensions:

In summary, perpetual preferred stock is a "third type of financing instrument" that lies between debt and equity: • For enterprises, it allows them to lock in funds long-term without the need to repay principal, alleviating cash flow pressure through flexible dividend arrangements, while avoiding equity dilution caused by the issuance of common stock. • For investors, although the position in the capital structure is lower than that of debt, perpetual preferred shares typically offer higher and more secured returns, and have priority over common stock in receiving payments during company liquidation. For this reason, it combines the flexibility of financing with the stable returns of investment, becoming an increasingly important option in corporate capital operations. Although perpetual preferred shares provide Strategy with a flexible financing method, their market volatility, liquidity, and structural risks cannot be ignored. • Market volatility and liquidity risk: The volatility of Bitcoin prices directly affects the repayment and refinancing ability of the Strategy. The burden of dividend payments increases with the scale of financing, and according to Saylor's "HODL" strategy, selling Bitcoin further limits the company's channels for obtaining cash flow. • Structural risks of the financing model: The dividend payments of non-cumulative perpetual preferred shares are at the discretion of the issuer, which may lead to refinancing difficulties when market confidence wanes; excessive reliance on retail investors can become a challenge if retail enthusiasm fades, as the attractiveness to institutional investors then becomes an issue. • Market Bubbles and Systemic Risks: The treasury company model for crypto assets may show signs of a bubble. Once market demand dries up, companies relying on this financing model may face the risk of a broken cash flow, which could lead to broader market fluctuations. Since the beginning of 2024, Saylor has raised over $40 billion through stock and bond financing. This year, Strategy has raised approximately $6 billion through four perpetual preferred stock issuances. Saylor even claims that theoretically, he could raise as much as $100 billion to $200 billion. These four issuances demonstrate a clear evolution of strategy and their respective market positioning.

Last month, Strategy launched STRC (Stretch), a floating-rate perpetual preferred stock designed to provide stable pricing and high returns for yield-seeking investors looking for indirect Bitcoin investment. Each share of STRC with a face value of $100 will pay monthly dividends, with an initial annualized yield of 9%. The core of Saylor's issuance of STRC (Stretch) is to highlight its accessibility. Unlike the tools he previously praised as innovative but overly complex or volatile—such as STRK, STRF, and STRD—STRC is more akin to a yield-enhanced savings account. By focusing on short-term investments and low price volatility, it eliminates the risks associated with long-term volatility while offering higher returns than bank deposits. It ensures that even during fluctuations in Bitcoin prices, the trading price of STRC can remain close to the $100 par value by being over-collateralized with Bitcoin, thereby providing investors with a more stable and attractive investment option. Why choose perpetual preferred stock? A fundamental shift in the business model. As the bottlenecks of traditional financing models become apparent, perpetual preferred shares have become a key choice for Strategy in the context of mNAV premium compression and exploring new sources of funding, fundamentally transforming the business model.

1. Traditional financing models encounter bottlenecks: Compression of mNAV premium The perpetual preferred stock experiment of Strategy originates from a real challenge: mNAV premium compression. The so-called mNAV premium refers to the phenomenon where the Strategy stock price is consistently higher than its Bitcoin net asset value. This premium was once the core of Saylor's "financial magic"—the company was able to raise funds in the market at a price above the actual value of Bitcoin, achieving the effect of "discounted coin purchases." However, Clear Street's Disruptive Technology Equity Research analyst Brian Dobson pointed out: "The mNAV premium has compressed in recent weeks, and the management of Strategy is understandably concerned about creating too much dilution." This change forced Strategy to seek new financing paths. The efficiency of traditional common stock issuance is significantly reduced when the mNAV premium narrows; while the convertible bond market has lower costs, it excludes retail investors, an important source of funds. The emergence of perpetual preferred stock is an inevitable choice under these constraints.
2. Discover new sources of funding: Retail investors' "faith-driven" model More importantly, Saylor discovered an unprecedented financing opportunity: converting personal influence directly into corporate capital.

Michael Youngworth, Head of Global Convertibles and Preferred Strategy at Bank of America, admitted: "To my knowledge, no company has utilized retail enthusiasm like Strategy has in the past." In the latest STRC issuance, retail participation reached as high as 25%, which is almost unimaginable in the traditional corporate preferred stock market. These retail investors adopt a "faith-driven" investment model for Strategy, providing a relatively stable source of funding for the company. Compared to institutional investors, they are less affected by short-term market fluctuations and are more willing to accept a higher risk premium. This unique investor structure has become an important competitive advantage that distinguishes Strategy from traditional enterprises. 3. Strategic Transformation and Upgrading: From Equity Financing to Hybrid Capital Structure The introduction of perpetual preferred shares actually marks a fundamental shift in the Strategy business model. In the traditional model, the strategy relies on rising stock prices to support financing capabilities, but this model is highly dependent on market sentiment and Bitcoin price fluctuations. The new model creates a relatively stable "intermediate layer" through perpetual preferred shares: preferred stock investors receive relatively certain dividend returns, common stock shareholders bear more volatility risk, and the company obtains perpetual funding with matched terms to hold Bitcoin as a perpetual asset. The redesign of this capital structure allows Strategy to better respond to changes in market cycles. Even in the case of a decline in Bitcoin prices and the disappearance of mNAV premiums, the company can still maintain its financing capabilities through perpetual preferred shares. 4. Ultimate Goal: Create a $100 Billion BTC "Credit" Concept Saylor's ambitions go far beyond this. He speculates that "theoretically, it is possible to raise $100 billion... even $200 billion," with the goal of creating a large-scale "credit" system based on Bitcoin as the underlying asset. The core logic of this vision completely overturns traditional corporate financing: it no longer relies on the cash flow of products or services, but rather constructs a self-reinforcing mechanism of "holding Bitcoin → generating stock price premium → financing to purchase coins → forming a positive feedback loop." Through multilayer financing tools such as perpetual preferred shares and convertible bonds, Strategy aims to transform the volatile digital assets into stable sources of income, using mNAV premium to achieve arbitrage of "buying Bitcoin at a discount," thereby forming a financial empire centered on Bitcoin. However, this financial experiment is fraught with risks. If successful, Bitcoin could transform from a speculative asset to a widely accepted financial collateral. But as short seller Jim Chanos warns, a 8-10% perpetual dividend payout could become a heavy burden when Bitcoin falls. Yuliya Guseva from Rutgers Law School bluntly stated, "If the market's appetite is exhausted, then this model will no longer be sustainable." Saylor is betting on the future of Strategy, wagering whether digital assets can redefine the foundational rules of the modern financial system. Conclusion: Innovation or Risk? The perpetual preferred stock experiment of Strategy represents a significant innovation in the financing model of digital asset enterprises. Michael Saylor cleverly combines personal influence, market sentiment, and digital asset investment through financial innovation, creating an unprecedented path for corporate development. From a more macro perspective, the experiment of Strategy represents a fundamental reconstruction of the relationship between enterprises and investors in the era of the digital economy. The traditional enterprise value assessment system—based on cash flow, profitability, and balance sheets—completely fails here, replaced by a new value creation mechanism based on asset appreciation expectations and market sentiment. This is not only a financial innovation but also an extreme test of the boundaries of modern enterprise theory. Regardless of the final outcome, this experiment by Strategy has provided a replicable template for subsequent digital asset enterprises, while also ringing alarm bells for regulators: as companies increasingly rely on retail investor sentiment and asset bubbles for financing, can traditional risk management frameworks still effectively protect investor interests? The answer to this question will determine the future direction of the digital asset industry.