Strategy SEC Filings

MicroStrategy Incorporated (operating as Strategy) filed a Free Writing Prospectus (FWP) to accompany five previously issued prospectus supplements and launched a new $4.2 billion at-the-market (ATM) program for its 10 % Series D “STRD” perpetual preferred stock. The presentation and transcript (Exhibits A & B) provide an extensive update on bitcoin-centric treasury activities, funding mix and performance KPIs through 30 June 2025.

Key operating highlights

• Bitcoin holdings: 597,325 BTC (cost basis not disclosed) with a market value of $65 billion, ranking #11 among U.S. non-financial corporate treasuries.
• Quarter-to-date unrealized gain: New FASB fair-value accounting shows a Q2 2025 unrealized gain of $14.1 billion ($13.4 billion on opening balance, $0.7 billion on Q2 purchases).
• KPI progress: YTD 2025 BTC Yield 19.7 % (target 25 %) and BTC $ Gain $9.6 billion (target $15 billion); management calls BTC $ Gain its most critical metric.
• Capital structure: Outstanding preferred stock totals $3.4 billion (STRK $1.2 billion, STRF $1.0 billion, STRD $1.2 billion). Debt stands at $8.2 billion in convertible notes. Illustrative “BTC Rating” coverage ratios: STRD 5.6×, STRK 6.2×, STRF 7.1×.
• Preferred share performance: Since their respective IPOs STRK +51 %, STRF +38 %, STRD +12 %; 30-day average trading volumes run $36-$42 million—40× typical U.S. preferreds.
• 42/42 capital plan: Overall program is 38 % complete (MSTR common ATM $23.9 billion issued; preferred ATMs $5.0 billion issued/committed). Remaining ATM capacity totals $44.8 billion.
• STRD specifics: 10 % cash coupon, non-cumulative, perpetual; effective yield now 10.5 % versus 11.8 % at launch. Management positions STRD for “yield-focused investors” seeking long duration and over-collateralisation.
• Market context: Management cites broad endorsements of bitcoin by U.S. administration, regulators, corporates and ETFs; asserts 97 % of institutional capital must invest via equity or credit rather than direct commodity exposure.

Strategic intent

The company aims to optimise “BTC Torque” (ratio of BTC value created to capital deployed) through simultaneous ATMs in four securities (MSTR, STRK, STRF, STRD). Illustrative models show higher torque for preferreds (12.7-12.9×) than common stock (6.7×) under a 30 % ten-year BTC CAGR scenario.

Risk considerations

• Extreme reliance on bitcoin price; illustrative credit-spread tables reveal sizeable spread premiums disappear under bearish BTC volatility assumptions.
• High leverage: total debt & preferred stock equals $11.6 billion; long-dated converts expose equity to material dilution if converted.
• KPI definitions (BTC Yield, BTC Gain etc.) are non-GAAP, exclude senior claims and assume perpetual refinancing.

The FWP is solely a marketing document; investors are urged to read the underlying prospectus supplements and SEC filings.

MicroStrategy Incorporated d/b/a Strategy has filed a Rule 424(b)(5) prospectus supplement for an at-the-market (ATM) offering of up to US$4.2 billion of its new 10.00% Series A Perpetual Stride Preferred Stock (ticker: STRD). Sales will be made from time to time through TD Securities, Barclays, The Benchmark Company, Clear Street and Morgan Stanley, acting as agents and receiving up to 2.0% of gross proceeds.

Security terms

• Initial liquidation preference: $100 per share (adjustable, but not below $100).
• Non-cumulative cash dividends at 10.00% per annum, payable quarterly if, as and when declared (first payment 30 Sep 2025).
• No conversion or pre-emptive rights; limited voting rights.
• Optional redemption if outstanding STRD falls below 25% of originally issued amount or upon a “tax event”; repurchase right for holders upon a “fundamental change.”
• Ranking: junior to existing 8.00% Series A Strike (STRK), 10.00% Series A Strife (STRF) preferred and all debt (~$8.24 bn), pari passu with any future parity preferred, and senior to Class A & B common shares.

Use of proceeds: “general corporate purposes,” prominently including additional bitcoin acquisitions, working capital and potential cash dividends on STRK and STRF. The company notes bitcoin traded between $50k and $110k in the past year and provides no timeline for monetisation, underscoring price-volatility risk.

Capital structure impact: Assuming full take-up at the 3 Jul 2025 closing price of $95.25, outstanding STRD shares would rise from 11.8 m to ~55.9 m. Total preferred equity would exceed 78 m shares across STRD, STRF and STRK, adding another sizeable layer of non-cumulative obligations senior to common stock.

Key risk disclosures: extensive risk section highlights bitcoin price volatility, liquidity constraints, non-cumulative nature of dividends, subordination to debt and senior preferred, potential fast-pay stock tax issues, and uncertainty around funding future dividends (likely reliant on additional capital raises).

The filing offers high-yield preferred exposure to MicroStrategy’s hybrid software/bitcoin-treasury strategy but introduces significant credit, crypto-market and structural subordination risks for investors.