Strategy Shifts Focus to Selling Preferred Stock to Acquire More Bitcoin While Common Shares Drop in US Markets

Bitcoin-focused treasury company Strategy is changing the way it funds its cryptocurrency purchases.

Instead of issuing common stock, which can dilute existing shareholders, the company plans to rely more heavily on selling preferred stock to acquire Bitcoin.

CEO Phong Le shared these plans in a recent interview with Bloomberg’s “The Close.”

“We will start to transition from equity capital to preferred capital,” Le explained, highlighting a shift in Strategy’s fundraising approach.

Preferred shares offer stability and dividends, making them attractive to certain investors while reducing the pressure on the company’s common stock.

Stretch Preferred Stock Takes Center Stage

Strategy’s preferred stock, known as Stretch (STRC), was introduced in July and is the fourth perpetual preferred stock offering the company has launched.

It provides buyers with an annual dividend exceeding 11 percent, appealing to investors seeking steady returns.

Le noted that while STRC will require “some seasoning” and careful marketing, he expects it to become a significant product for the company throughout the year.

Preferred stock sales like STRC are designed to fund Bitcoin purchases without impacting the common stock’s price.

STRC Hits Par Value, Could Trigger More Offerings

After dipping below $94 earlier this month when Bitcoin fell under $60,000, STRC reclaimed its par value of $100 by the close of trading on Wednesday — a milestone Le called “the story of the day.”

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Hitting par value means Strategy could potentially issue more STRC shares to buy additional Bitcoin.

Meanwhile, Bitcoin has remained relatively stable over the past 24 hours, trading around $66,800 after briefly topping $68,000.

Focus on Core Business Over Buying Rivals

While the crypto treasury space has grown crowded, with companies competing for a small segment of investors, Le emphasized that Strategy will not chase acquisitions of underperforming treasury firms.

Analysts have speculated that such acquisitions could be a cheap way to accumulate Bitcoin, but Le considers them a “distraction.”

“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.

This philosophy suggests Strategy is concentrating on its Bitcoin holdings and preferred stock sales rather than mergers or acquisitions.

Market Reaction

Despite STRC’s progress, Strategy’s common shares (MSTR) fell over 5 percent on Wednesday, closing at $126.14.

This reflects broader market volatility and investor caution in the crypto treasury space, which has seen some rival companies’ Bitcoin holdings exceed the companies’ overall market value.

What’s Next?

Strategy will likely continue to promote STRC to investors interested in steady dividend returns, using the funds raised to increase its Bitcoin holdings.

Market watchers will monitor whether STRC can sustain its par value and how effectively the company can leverage preferred stock to expand its crypto treasury without putting pressure on its common shares.

Bitcoin’s price fluctuations and overall sentiment in the crypto treasury market will also play a role in determining Strategy’s next moves.

Investors will be looking for further offerings and updates on how the company balances dividends, stock price stability, and Bitcoin accumulation.

Summary

Strategy is pivoting from selling common stock to preferred stock as a primary method to fund Bitcoin purchases, with CEO Phong Le highlighting the benefits of STRC preferred shares.

STRC recently reclaimed its par value of $100, allowing potential new issuances to support additional Bitcoin acquisitions.

The company remains focused on its core business rather than acquiring rivals, emphasizing stability over speculative growth.

Meanwhile, common shares dropped over 5 percent, and Bitcoin prices remained around $66,800, reflecting ongoing volatility in the crypto treasury market.