When Bitcoin prices turned against Michael Saylor, he quietly pivoted to a risky financial gambit

Let’s study the specifics. On the shut of Q2 2020, shortly earlier than Saylor began shopping for Bitcoin, Technique had 76 million shares of Class A standard inventory excellent (it additionally has Class B shares harboring additional voting rights which are largely owned by Saylor; I’ll concentrate on Class A shares since they account for all of the issuance over the previous six years). As of Feb. 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 at the moment are valued at over $10 billion, the one rating closest to Technique over the identical span was residence furnishings and decor vendor Wayfair at a 30% dilution, one-tenth the Saylor quantity. In third place is software program supplier Twilio at 27%.

Technique pioneered a mannequin based mostly on continuously rising the quantity of Bitcoin its traders personal per share, or its key metric of BPS (Bitcoin per share). Till this yr, when it additionally moved into most popular inventory in a huge method, Technique relied totally on elevating funds from fairness choices to amass the signature digital forex. The method amounted to a type of magical arbitrage: Technique’s inventory value stored rising a lot sooner than the worth of Bitcoin. So by promoting shares at what now seem like extremely inflated prices and shopping for ever extra cash, Saylor might maintain mountain climbing the rely each shareholder successfully “owned.”

Right here’s an instance. From the top of 2023 till mid-July of final yr, Technique shares jumped greater than sevenfold, 3 times the Bitcoin climb of two.8 occasions. At first of the interval, Saylor might purchase about 1.5 Bitcoin by promoting 1,000 shares. However by the point Technique’s market cap reached its summit simply after Independence Day final yr, it might buy 3.8 tokens, or 150% extra, promoting the identical quantity of inventory. For a whereas, Saylor ran what was primarily an “accretion” machine. It bore some resemblance to a situation the place a financial engineer deploys a extremely overvalued asset to maintain issuing shares as a “forex” for making a number of acquisitions that elevate 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 strategy had raised the cash held for every 1,000 shares from that 1.5 on the finish of 2023, to 2.12, a rise of 41%. Properly previous midyear, Saylor stored cranking on inventory gross sales regardless of the worsening math. The investor presentation for This fall boasts that Technique towered because the “largest raiser of widespread fairness” within the U.S. for 2025, promoting shares value $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 sooner than Bitcoin’s 51% tumble from $129 to $68 (as of Feb. 17). As a outcome, the accretion recreation not labored. Each time Saylor sells inventory to purchase Bitcoin now, as an alternative of sweetening 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: “Our enterprise goal is rising Bitcoin per share.” Why didn’t all of the shares Saylor stored promoting as his inventory value tanked lead to a huge dilution in BPS? He offset that drag by reverting to a 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 yr, gathering a further $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. Have been he to maintain promoting inventory as his prime funding technique as an alternative, he’d be remodeling Technique into a dilution machine, simply the other 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 prepare rolling. Even earlier than Technique went huge on preferreds, it had gathered a massive 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 yr in dividends. Plus, Technique will 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 until the inventory soars once more, the “equitizing” formulation will maintain undermining Saylor’s cherished, and closely touted, aim. Plus, the heavy debt load and the large funds for the popular inventory have rendered Technique an especially risky firm. It’s already proved a awful funding up to now two years, dropping by 30%.

Massive dilution’s bought a unhealthy title. The most important tech gamers from Apple to Microsoft contemplate it a matter of delight to maintain shrinking their share counts. Michael Saylor took the other 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 value drops, the extra it appears like Saylor divided these holdings amongst too many shares. His traders are recently paying the worth for financing that Saylor claimed was supercheap and now appears extraordinarily costly.