President Trump signed an executive order in January that blocks underperforming federal contractors from buying back their own stock or paying dividends until production improves. The order targets large defense firms like Lockheed Martin, Northrop Grumman, and RTX, renewing pressure on how those companies use their cash. The move comes as an unrelated but notable case — MicroStrategy, now called Strategy — sees its own stock-buyback-adjacent model struggle with a thinning premium.
What the order does
The executive order bars contractors that miss performance targets from repurchasing shares or issuing dividends. Trump has said stock buybacks are a fake way to raise a price. The policy applies to major defense contractors, forcing them to reinvest in production instead of financial engineering. It doesn't directly touch crypto firms, but it signals a broader skepticism toward buyback-heavy corporate finance.
Where MicroStrategy fits
MicroStrategy doesn't repurchase common stock. Instead, it sells new shares and preferred stock to buy Bitcoin. The company holds more than 845,000 BTC — over 4% of all bitcoin in circulation. The model works when the company can issue shares above the value of its coin holdings, buying more bitcoin, lifting holdings per share, and supporting a premium over net worth. In 2026 that premium has thinned. Bitcoin trades near $64,360. Strategy's stock has fallen by more than half over the past year, and its market value slipped toward $40 billion.
How the model works — and why it's under pressure
Michael Saylor frames each raise as a way to grow Bitcoin per share. When the premium is strong, new share sales add real value. But when the premium fades, those sales add little. The company has bought back debt this year, repurchasing convertible notes at a discount, and leaned on preferred stock issuance to keep buying without adding senior loans. The fading premium raises a hard question: can the strategy still work if the market stops paying a premium for the structure?
The executive order is about defense contractors, not crypto. But it underscores a broader debate over corporate capital allocation. For MicroStrategy, the immediate test is whether the premium can recover. Saylor continues to issue shares and buy Bitcoin, but without the premium, the math gets tighter. The market will watch next quarter's results for any sign that the strategy is adjusting — or that the premium is coming back.
