Peter Schiff claimed on his podcast that Strategy (MSTR), the Bitcoin treasury company led by Michael Saylor, has entered a 'death spiral' that will result in bankruptcy and a flood of investor lawsuits. Schiff cited the decline of Strategy's preferred stock, Stretch (STRC), below its $100 par value as a turning point, arguing that the 11.5% dividend cannot be supported by the company's underlying software operations. On Friday, Saylor responded via X, stating that Strategy remains focused on Bitcoin, disciplined capital allocation, and long-term value creation, as MSTR closed at $82, down over 3%.
Schiff Argues Strategy Cannot Service Debt Commitments
Schiff stated that Stretch was sold as a steady, income-producing product for seniors, but pays an 11.5% dividend that the corporation cannot support from its operations. He claimed there is a 'tiny software business beneath [Strategy's] pile of Bitcoin' that cannot service the company's preferred and convertible debt commitments. Schiff said the model assumed Bitcoin would appreciate 30% a year, a pace he said recent history did not support, adding that the asset had drifted about sideways over five years.
Schiff argued that Strategy could not sell Stretch without materially boosting its dividend, leaving only the sales of ordinary shares to buy Bitcoin. He said, 'The only way to sell more Stretch is to get the price up to 100, but he couldn't do that without substantially raising the yield, so I knew that he was out of the business of selling Stretch.' Since the stock was priced below net asset value, Schiff claimed each transaction diluted Bitcoin per share and eroded shareholder value.
Rosen Law Firm Initiates Inquiry Into Strategy Securities
Rosen Law Firm has initiated an inquiry into Strategy and has been seeking investors who purchased the company's securities to join a potential class action lawsuit. The probe involves many Strategy-related assets, including MSTR and its preferred shares, STRF, STRC, STRK, and STRD. Schiff said Strategy was facing a shareholder class-action lawsuit over claimed misrepresentations, and that Saylor was held to a higher standard as the chairman of an SEC-regulated company. He predicted that one law firm was already putting a case together and others would do the same, calling the potential litigation 'a slam dunk.'
Saylor Responds and MSTR Stock Closes Down Over 3%
On Friday, Saylor noted via X, 'Strategy remains focused on Bitcoin, disciplined capital allocation, credit quality, and long-term value creation. We appreciate our investors and will continue to execute with transparency and resolve.' MSTR's price closed at $82, down over 3% on Friday. On Stocktwits, retail sentiment around MSTR improved to 'bullish' from 'extremely bearish' over the past month.
FAQ
What did Peter Schiff claim about Strategy (MSTR) on his podcast?
Peter Schiff claimed on his podcast that Strategy (MSTR) has entered a 'death spiral' that will result in bankruptcy and a flood of investor lawsuits. He cited the decline of Strategy's preferred stock, Stretch (STRC), below its $100 par value as a turning point.
What inquiry did Rosen Law Firm initiate into Strategy?
Rosen Law Firm has initiated an inquiry into Strategy and has been seeking investors who purchased the company's securities to join a potential class action lawsuit. The probe involves MSTR and its preferred shares, STRF, STRC, STRK, and STRD.
How did Michael Saylor respond to Schiff's claims?
On Friday, Michael Saylor responded via X, stating that Strategy remains focused on Bitcoin, disciplined capital allocation, credit quality, and long-term value creation. He said the company will continue to execute with transparency and resolve.
