Arca Executive Says Strategy’s $15B Preferred Stock Burden Is ‘Out of Hand’

Pressure may be building on Strategy’s capital structure as Jeff Dorman highlighted $15 billion in preferred stock obligations and comments from the CEO regarding possible sales of Bitcoin.

Strategy is facing renewed scrutiny over its preferred stock financing model as investors question whether dividend obligations could eventually force the company to sell part of its Bitcoin holdings.

The situation surrounding Strategy has “gotten out of hand,” Jeff Dorman said in an X post on Thursday, referring to roughly $15 billion in preferred stocks that carry about $1.5 billion in annual dividend obligations.

Jeff Dorman warned that the structure could become increasingly difficult to manage if market conditions remain volatile, with Bitcoin trading about 16% lower year-to-date at roughly $73,737 at the time of writing.

The remarks have added to a growing debate over whether Strategy’s Bitcoin-linked capital structure can endure prolonged price volatility without forcing asset sales.

$15 Billion Preferred Stock Faces Mounting Pressure

Jeff Dorman’s warning centers on Strategy’s financing model, which includes a large issuance of preferred stock carrying fixed dividend commitments.

Strategy has issued five preferred shares — STRK, STRF, STRD, STRC and STRE — with different dividend terms, seniority levels and risk exposure carried by each within the capital structure.

Jeff Dorman argues the model was built on the assumption that Bitcoin would keep rising strongly enough to support it, describing it as a bet that BTC was “about to moon” and could cover future obligations.

He said equity raises by Strategy helped reduce near-term default concerns, but questioned what followed, calling the company’s decision to repurchase 2029 maturity bonds “baffling” amid continued pressure from dividend obligations.

According to Jeff Dorman, the structure ultimately leaves only stark outcomes: either “sell Bitcoin to pay the prefs” or “stop paying the dividend,” with direct and asymmetric consequences carried by each scenario for Strategy, its investors and Bitcoin itself.

CEO Acknowledges Potential Bitcoin Sales as Polymarket Odds Climb

Jeff Dorman’s remarks came as Phong Le confirmed that Strategy could sell Bitcoin at some stage in the future after the possibility was raised by executive chairman Michael Saylor in mid-May.

“We’ll likely sell Bitcoin at some point in time, but we will be net increasing our Bitcoin and more importantly, increasing our Bitcoin per share,” the CEO said in a CNBC Fox Business exclusive on Thursday.

Amid growing expectations that Strategy might need to sell Bitcoin to manage its balance sheet and obligations, increasing odds of a sale throughout 2026 have been shown by prediction market platform Polymarket.

The “MicroStrategy sells any Bitcoin by” market shows odds of roughly 90% by Dec. 31, 2026, 71% by June 30 and 18% by May 31.

So far this year, around 170,000 Bitcoin have been purchased by Strategy, bringing total holdings to 843,738 BTC acquired at an aggregate purchase price of $63.87 billion and an average cost of about $75,700 per Bitcoin.