More preferred stock is the new strategy for Strategy CEO Phong Le to fund Bitcoin buys. The company is shifting away from issuing common stock to finance its Bitcoin acquisitions and is not interested in acquiring Bitcoin treasuries from other firms, according to Le.
“We will start to transition from equity capital to preferred capital,” Le told Bloomberg’s “The Close” on Wednesday.
Stretch (STRC) is Strategy’s perpetual preferred stock, launched in July, and is aimed at buyers looking for stability by offering an annual dividend of over 11%. STRC is the company’s fourth perpetual preferred offering, launched to finance its Bitcoin (BTC $67,226) purchases. It’s an alternative to issuing new shares that dilute its stock price.
Le admitted that its preferred stock will “take some seasoning” and marketing to pitch traders on the offering, but added that “throughout the course of this year, we expect Stretch to be a big product for us.”
Strategy eyes more preferred stock
STRC reclaimed its par value of $100 at the close of trading on Wednesday for the first time since mid-January, which Le said was the “story of the day.”
The stock had dipped below $94 earlier this month as Bitcoin crashed under $60,000, but with it now trading at par — the price Strategy has designated as its minimum — the company could again offer shares to fund more Bitcoin purchases.
Bitcoin has traded mostly flat over the last 24 hours at around $66,800, down from an intraday high of over $68,000.
No interest in buying rivals
Analysts have warned that the crypto treasury space is becoming crowded as companies compete for a small segment of traders, leading to some companies’ crypto holdings being worth more than the companies themselves.
“I think it would be a distraction to go buy, at a discount to net asset value, another digital asset treasury company.”
In that case, some analysts said that rival treasury firms could move to acquire underperforming companies to scoop up Bitcoin on the cheap, but Le said Strategy isn’t interested in making such a move.
“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.
Shares in Strategy (MSTR) ended trading on Wednesday down over 5% at $126.14.
Stay updated on related Crypto news.
Preferred stock as a strategy
The move towards preferred stock issuance signals a shift in Strategy’s financing approach. By focusing on instruments like STRC, the company aims to attract investors seeking stable income through dividends, while minimizing the dilutive effects of common stock offerings. This strategy could prove crucial as Strategy continues to accumulate Bitcoin and navigate the volatile cryptocurrency market. The success of STRC and similar offerings will likely determine the future of Strategy’s Bitcoin acquisition plans, and the company’s ability to maintain its position as a leading Bitcoin treasury holder.
Source: Cointelegraph
