JPMorgan: MicroStrategy Should Rebuild Dollar Cash Reserves

JPMorgan analysts said MicroStrategy needs to rebuild its dollar cash reserves to restore investor confidence after the company sold 32 Bitcoin for about $2.5 million and recorded its worst weekly stock decline since November 2022.

The analysts wrote in a Monday note that a larger cash cushion would reduce concerns that MicroStrategy might sell more Bitcoin to meet dividend obligations. The company disclosed the 32‑Bitcoin sale last week; co‑founder and executive chairman Michael Saylor had indicated the transaction in advance. Although the sale was a small share of MicroStrategy’s holdings, it prompted concern among holders of the firm’s flagship preferred shares, STRC, which have a market capitalization above $10 billion.

After the decline, MicroStrategy purchased 1,550 Bitcoin for about $101 million and said it had taken steps to bolster its cash balance. An SEC filing shows the company holds 845,256 Bitcoin. At roughly $63,000 per coin, that holding is worth about $53.3 billion. The filing and company disclosures show the Bitcoin holdings sit about $10.7 billion below MicroStrategy’s aggregate cost basis.

JPMorgan noted that MicroStrategy’s purchases have made up the majority of Bitcoin demand so far this year, totaling 171,473 Bitcoin worth about $10.9 billion. The analysts added that clarity from MicroStrategy on how it will fund dividends, and progress on U.S. cryptocurrency legislation, would support more constructive investor sentiment. “In our opinion, a rebuilding of the company’s dollar reserves might be needed to restore confidence and reduce investor concerns that the company would sell more Bitcoin to cover dividend payments,” they wrote.

MicroStrategy said it has earmarked $1 billion for debt management and to support STRC dividends. The company said STRC distributions will be paid on a bimonthly schedule beginning in July. Before the firm repurchased debt at a discount and reduced cash reserves by about 61%, MicroStrategy had a cash cushion of as much as $2.25 billion. Analysts noted the company previously had enough cash to cover just over six months of STRC dividends.

MicroStrategy’s stock has moved sharply this year. After the liquidation and the subsequent buyback, shares rose intraday as Bitcoin recovered, trading as high as $126 in one session. The stock remains well below a prior high of $457 and narrowed year‑to‑date losses after trading as low as $104 in early February.

MicroStrategy’s balance sheet and stock performance remain closely linked to changes in the price of Bitcoin. The preferred shares carry an annualized dividend rate of 11.5%, a level the company has maintained in recent months, and investors continue to focus on whether MicroStrategy’s cash position can sustain those payouts without further sales of digital assets.