Last week, Strategy (MSTR) made a significant move by utilizing its perpetual preferred stock for the first time as the main method to acquire bitcoin. This development could indicate a new direction in how the company finances its bitcoin strategy.
On Monday, the firm revealed that it had acquired 22,337 $BTC during the previous week, marking this as its fifth-largest purchase to date.
The issuance of STRC perpetual preferred stock amounted to $1.18 billion, which translates to approximately 16,800 $BTC at an average price of $70,000. This figure significantly surpasses the $396 million raised through its common stock at-the-market (ATM) program—historically used for building bitcoin reserves—which now stands at a total of 761,068 $BTC.
The current dividend rate for STRC is set at 11.5%, indicating that the $1.18 billion issuance results in annual dividend obligations close to $135 million. Consequently, this has increased the company’s overall annual dividend responsibilities beyond $1 billion.
Nevertheless, Strategy has allocated around $2.25 billion in USD reserves specifically designated for these obligations; this acts as a safeguard against rising capital expenses.
With common stock values plummeting over 70%, there seems to be an incentive for maintaining higher share prices without further dilution of equity.
This situation suggests that common equity may be utilized more judiciously—primarily when mNAV (multiple to net asset value) is significantly above one or when there’s a need to bolster USD reserves. Essentially, this indicates less dependence on selling common shares while increasingly relying on STRC and avoiding new issuances of common stock.
Taken together, it appears that Strategy is progressively funding its bitcoin acquisitions through preferred capital sources with STRC becoming central to this strategy.
Is Another Dividend Increase on The Horizon?
The early signs suggest pricing pressure on STRC; it has traded below its par value of $100 for three consecutive days following its ex-dividend date on March 15th. Given that its one-month volume-weighted average price remains under par value, there’s potential for an increase in dividends by another 25 basis points aimed at supporting market prices.
Read More: The math behind Strategy’s path to achieving one million bitcoins by late 2026