Strategy shifts to preferred stock for Bitcoin purchases
Strategy plans to rely more heavily on preferred stock issuance to finance Bitcoin purchases, moving away from selling common shares, according to CEO Phong Le in an interview on Bloomberg’s “The Close” on Wednesday.
“We will start to transition from equity capital to preferred capital,” Le said.
Stretch (STRC), the firm’s perpetual preferred stock introduced in July, targets investors seeking stability and offers an annual dividend of over 11%. STRC marks Strategy’s fourth perpetual preferred issuance and is designed to support its Bitcoin (BTC) acquisition program as a non-dilutive alternative to issuing additional common shares.
Le noted the preferred program will require time and outreach to gain traction with market participants, but added that “throughout the course of this year, we expect Stretch to be a big product for us.”
Strategy may resume offerings as STRC returns to $100
STRC closed at its $100 par value on Wednesday for the first time since mid-January, which Le described as the “story of the day.” The security had fallen below $94 earlier this month as Bitcoin slipped under $60,000. With STRC back at par — the company’s designated minimum price — Strategy could restart preferred share offerings to fund additional Bitcoin purchases.
Bitcoin was largely unchanged over the past 24 hours at around $66,800, after touching an intraday high above $68,000.
Acquiring rival Bitcoin treasuries viewed as a “distraction”
Analysts have cautioned that the crypto treasury segment is becoming crowded, with firms competing for a relatively limited investor base. In some cases, crypto holdings have grown to exceed the market capitalization of the companies that hold them.
Some market watchers have suggested that underperforming competitors could become acquisition targets to gain Bitcoin at a discount. Le said Strategy is not pursuing that strategy.
“I think in any new market, whether it be electric cars or AI or SaaS software, you want to focus on your core product,” Le said. “I think it would be a distraction to go buy, at a discount to net asset value, another digital asset treasury company.”
Shares of Strategy (MSTR) closed Wednesday down over 5% at $126.14.
Stay informed, read the latest news right now!
Disclaimer
The content on TrustsCrypto.com is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency markets are highly volatile, always do your own research before making decisions.
Some content may be assisted by AI and reviewed by our editorial team, but accuracy is not guaranteed. TrustsCrypto.com is not responsible for any losses resulting from the use of information provided.
