Peter Schiff has reignited his feud with the Bitcoin (CRYPTO: BTC) world — this time taking direct aim at Michael Saylor and MicroStrategy Inc‘s (NASDAQ:MSTR) capital structure. In a flurry of posts on X, Schiff argued that the company’s high-yield preferred shares, marketed as income products, are dangerously misunderstood by investors.
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His warning was blunt: “Dividends are only paid if MSTR decides to declare a dividend… Undeclared dividends don’t accumulate. They are lost forever.”
Benzinga reached out to MicroStrategy for comment but did not receive a response before publication.
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The Yield That Isn’t Really A Yield
Schiff claims the core flaw is structural. Many income-focused funds have been buying the preferreds assuming they’ll receive steady payouts. Schiff says that assumption is wrong.
As he wrote, “MSTR’s business model relies on income-oriented funds buying its ‘high-yield’ preferred shares. But those published yields will never actually be paid.” He argues the shares function more like optional coupons at the company’s discretion, not traditional cumulative preferreds where skipped payments accrue.
That flexibility may look harmless today, but Schiff says it masks a financing model that could unravel fast. In his view, once fund managers realize that dividends “will never actually be paid,” they’ll “dump the preferreds,” shutting down MicroStrategy’s ability to issue more.
That’s when he believes the real trouble begins.
Why Schiff Calls It A “Death Spiral”
The phrase wasn’t used lightly. Schiff argues MicroStrategy depends on selling more preferreds to maintain its strategy — and losing that channel would leave the company stranded. Without reliable income buyers, the firm’s ability to raise capital dries up, the preferred market collapses, and the stock comes under pressure.
To Schiff, it’s the definition of a self-reinforcing unwind: fewer buyers lead to fewer declared dividends, which lead to even fewer buyers.
He paired the critique with a broader attack on Bitcoin after the token slid below $90,000, noting it is “down 40% priced in gold.” For Schiff, MicroStrategy’s structure and Bitcoin’s drop are two sides of the same argument.
Why It Matters To Investors
Schiff’s prediction is stark — he believes MicroStrategy could “eventually go bankrupt.” Whether investors agree or not, his attack zeroes in on the fine print of a financing vehicle many shareholders haven’t fully examined.
If sentiment shifts, the preferreds may become the market’s next pressure point.
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