Some people are saying preferred stock default doesn’t matter. Let me break it down for the newbies First of all, the interest on preferred stock compounds and rolls over, with a maximum rate of 18% More importantly, this counts as credit deterioration, which means the path for issuing more stock to raise funds is basically cut off completely MicroStrategy still has $6.7 billion in convertible bonds. If the stock price isn’t high enough and bondholders don’t want to convert to equity, the company will need to pay back the principal in cash. In this situation, it could trigger bankruptcy liquidation