MicroStrategy’s Latest Bitcoin Buy Highlights Growing Dilution Risks

MicroStrategy disclosed its latest Bitcoin purchase on January 26, marking its fourth acquisition of the month and reinforcing its long-term commitment to the digital asset. The company acquired $264.1 million worth of Bitcoin at an average price of $90,061 per BTC, bringing its overall average Bitcoin purchase price to $76,037. The buy took place during a volatile January trading period, as Bitcoin pulled back from early-month highs above $95,000 into the high-$80,000 range.

While the purchase itself aligns with MicroStrategy’s aggressive Bitcoin strategy, the way it was funded has renewed concerns among investors. The company financed the acquisition almost entirely through capital markets rather than operational cash flow. Between January 20 and January 25, MicroStrategy sold 1,569,770 shares of common stock, generating $257.0 million in net proceeds, and issued 70,201 shares of STRC preferred stock, raising an additional $7.0 million. These combined proceeds closely matched the total cost of the Bitcoin purchase, underscoring the firm’s ongoing reliance on equity issuance to accumulate BTC.

This funding model becomes more problematic as MicroStrategy’s multiple to net asset value, or mNAV, has slipped below parity. As of January 26, the company’s diluted mNAV stood near 0.94x, meaning the stock traded at a roughly 6% discount to the value of its Bitcoin holdings per share. This is critical because issuing shares below net asset value can dilute shareholder value rather than enhance it.

Data from January illustrates this growing pressure. Although Bitcoin holdings rose from 673,783 BTC to 712,647 BTC during the month, diluted shares increased from 345.6 million to 364.2 million. Bitcoin per diluted share increased by just 0.38%, and in the most recent week, accretion was nearly flat. Dilution is accelerating, while the benefit to shareholders is fading.

Over the past 19 months, MicroStrategy has raised an estimated $18.56 billion through common equity issuance, issuing roughly 226.6 million shares. Preferred stock issuance has also increased, adding senior claims and long-term obligations. The company can still buy Bitcoin, but unless its equity returns to a premium, continued accumulation may increasingly come at the expense of shareholder value rather than enhancing it.