Michael Saylor faces fresh legal threat as Strategy stock tumbles

Michael Saylor has faced renewed legal pressure after a shareholder rights firm opened an investigation into Strategy, adding to mounting scrutiny that has accompanied the company’s sharp stock decline and Bitcoin’s latest selloff.

According to Rosen Law Firm, the investigation is examining whether Strategy misled investors through materially inaccurate business disclosures. The firm said it is evaluating potential securities claims and is preparing a possible class action on behalf of shareholders who suffered losses.

The announcement comes roughly a week after Bitcoin critic Peter Schiff publicly argued that investors in Strategy’s STRC preferred shares could have grounds for legal action if they purchased the security based on Saylor’s promotion of the company’s Bitcoin-backed investment strategy. Schiff’s remarks came before any law firm publicly disclosed plans to examine potential shareholder claims.

Meanwhile, pressure on the company has continued in the market. Yahoo Finance data show Strategy shares fell below the $100 threshold earlier this week before dropping to around $86 on Thursday, leaving the stock down more than 6.5% on the day and about 23% over the past week.

Concerns have expanded beyond the stock price

Legal scrutiny follows growing criticism that had already surrounded Strategy’s Bitcoin treasury model. As crypto.news reported yesterday, Schiff argued that continued weakness in Strategy’s shares could eventually force the company into difficult capital allocation decisions.

According to Schiff, persistent selling pressure from short sellers could make buying back Strategy shares more attractive than purchasing additional Bitcoin. He argued that selling part of the company’s Bitcoin holdings to finance stock repurchases could narrow the gap between Strategy’s market valuation and the value of its underlying assets, although he questioned whether such a move would be enough to restore investor confidence.

Schiff also warned that any sale of Bitcoin by Strategy could weigh on the cryptocurrency market itself by adding fresh supply during a period of weak demand.

Separate concerns have also come from on-chain analytics firm CryptoQuant. The firm’s recent analysis urged Strategy to slow its pace of Bitcoin accumulation and rebuild liquidity instead. 

According to CryptoQuant, annualized dividend obligations tied to Strategy’s STRC perpetual preferred stock have climbed to about $1.2 billion, while the company’s cash reserves have fallen 38% during 2026.

CryptoQuant further estimated that dividend coverage has dropped from more than seven years to roughly 14 months. The firm calculated that restoring coverage to 24 months would require approximately $2.8 billion in cash, nearly double the company’s existing reserves.

Management continues backing its Bitcoin strategy

Even as outside criticism has intensified, Strategy’s leadership has continued defending its long-term Bitcoin approach. Saylor recently pointed to conditions during the 2022 crypto bear market, when Bitcoin traded near $16,000, and the company’s debt exceeded the combined value of its Bitcoin and cash reserves.

According to Saylor, the company’s financial position has since improved substantially, with Bitcoin and cash reserves now exceeding outstanding debt by more than $40 billion. His comments indicate that Strategy does not intend to abandon its Bitcoin treasury strategy despite the latest market turbulence.

Meanwhile, additional selling pressure emerged during Thursday’s session. Market commentator Zerohedge claimed that unusually heavy put option buying in Strategy shares coincided with fresh weakness in both MSTR stock and Bitcoin.

At the same time, Bitcoin extended losses after U.S. Personal Consumption Expenditures inflation reportedly accelerated to 4.1%, its highest reading since 2023, adding another source of pressure for both the cryptocurrency and companies with large Bitcoin exposure.