Strategy Inc. is doubling down on Bitcoin. The move is intended to calm investors while the company continues to buy the cryptocurrency asset it has made central to its identity. According to the report, Pivot is focused on expanding its suite of perpetual preferred stocks that trade for nearly $100 and pay monthly reset dividends.
Preferred stock to fix volatility
Stretch, often referred to as STRC, is now at the center of that plan. According to Strategy’s own listing, STRC currently carries an annual dividend reset of 11.25% and is structured so that its price tends to trade near its $100 par value.
According to the report, Strategy CEO Phong Le told Bloomberg that the company will rely more on preferred equity rather than common stock to fund future Bitcoin purchases.
constant buying attitude
Michael Saylor, the company’s chairman, was outspoken about holding and buying. According to the report, Saylor will not sell any of its Bitcoin holdings even if the price plummets, and Strategy confirmed that it plans to continue buying each quarter. This comment is intended to reassure holders who have seen their stocks move in tandem with Bitcoin’s movements.
Fund your Bitcoin purchases without affecting the stock price
The logic here is simple. Appealing to investors seeking income, they issue preferred stock and use the proceeds to buy more Bitcoin instead of selling common stock or liquidating their holdings.
Stretch is marketed as a way for investors to gain exposure while avoiding wild swings affecting Strategy’s common stock. Some market observers argue that this transfers risk to holders in the first place, and critics in the financial commentary have been vocal about the optics of increasing stability through yield instruments.
Bitcoin amount and its meaning
According to the report Strategy revealed, the Bitcoin stack is still massive, amounting to hundreds of thousands of coins, and management points to a long time horizon for returns.
The company’s approach makes its balance sheet look more like a cryptocurrency fund than a traditional software problem, which raises questions about how investors should value the underlying assets and stocks.
Investor Implications and Market Signals
Investors seeking cash returns without direct cryptocurrency exposure may be attracted to preferred stocks. At the same time, preferred stocks carry their own risks. Dividends can be reset, and the company’s obligations on preferred stock compete with the need to manage leverage and reserves.
Featured image from Unsplash, chart from TradingView
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