MicroStrategy Plans More Preferred Stock Sales as MSTR Falls 17% Year to Date

TLDR

• Strategy plans more perpetual preferred stock to reduce reliance on common share sales.
• Stretch STRC resets its dividend monthly and aims to trade near a $100 par value.
• Recent raises were about $370M common stock and about $7M perpetual preferred shares.
• Diluted mNAV was near 0.95x, showing MSTR traded below Bitcoin value per share.

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Strategy, formerly MicroStrategy, plans to issue more perpetual preferred stock as it keeps buying Bitcoin. The company says the move can offer investors exposure with less price movement than MSTR shares. The plan arrives as MSTR is down nearly 17% year to date, and Bitcoin has also fallen in the period. Strategy has relied on capital markets for Bitcoin purchases, so the funding mix is under closer review.

Why Strategy is expanding preferred stock funding

Chief executive Phong Le said Bitcoin moves can amplify moves in Strategy’s common stock. He told Bloomberg that digital asset treasuries are built to track Bitcoin and can rise or fall faster. “When BTC rises, Strategy’s digital asset treasury plan drives outsized gains,” Le said in the interview. 

He added that in declines, the shares can drop more sharply because the model follows the asset. Strategy has used common stock sales as a main source of fresh capital. Yet a lower share price can make new issuance harder for investors to accept.

Le said the company wants to shift more funding from common equity to preferred capital. “We will start to transition from equity capital to preferred capital,” he said on Bloomberg’s “The Close.”

How Stretch preferred shares are designed to trade near $100

Strategy’s preferred product is branded Stretch and it trades under the ticker STRC. It is perpetual preferred stock, and it is designed to trade near a $100 par value. Stretch pays a variable dividend that is reset each month. The current rate cited in the interview is 11.25%, and the reset aims to support trading near par.

Preferred shares sit above common stock in the capital structure, but they sit below debt. They can appeal to buyers who want income and also want less price movement than common shares. 

Le said the company built Stretch for investors seeking digital exposure without large swings. “We’ve engineered something to protect investors who want access to digital capital without that volatility,” he said. Le also pointed to a recent close at par as a key moment for the product’s design. “To me, the story of the day is Stretch closes at $100,” he said in the same interview.

What the plan means for MSTR investors and future Bitcoin buys

Strategy recently raised about $370 million through common stock sales and about $7 million through preferred shares. The company used the proceeds to support several weekly Bitcoin purchases, including more than 1,000 BTC earlier this week. As of the latest figures cited, Strategy held about 714,644 BTC. At around $67,422 per coin in the cited data, the holding value was near $48 billion.

Bitcoin was cited as below Strategy’s average purchase price of about $76,056 per coin. That gap translated to an unrealized loss of about $6.1 billion based on those prices. A key metric is mNAV, which compares the share price to the Bitcoin value per share. SaylorTracker data cited a diluted mNAV near 0.95x, which means the stock traded at a discount.

When shares trade above net asset value, new issuance can be less dilutive for holders. If the stock is priced below net asset value, selling common shares can dilute existing holders more. More preferred funding can reduce reliance on discounted common issuance, yet it adds dividend commitments. Le said Strategy is focused on its own product and called buying rival treasuries “a distraction.”

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