Nikolas Sargeant
Bitcoin treasury company Strategy will increasingly rely on preferred stock sales to acquire Bitcoin, shifting away from its strategy of selling common stock, CEO Phong Le stated as the company seeks to minimize shareholder dilution while maintaining aggressive accumulation.
"We will start to transition from equity capital to preferred capital," Le told Bloomberg's "The Close" on Wednesday. The strategic shift reflects Strategy's attempt to balance Bitcoin purchases with shareholder concerns about dilution from continuous common stock issuance.
Stretch (STRC) is Strategy's perpetual preferred stock launched in July, aimed at buyers seeking stability by offering an annual dividend exceeding 11%. STRC represents the company's fourth perpetual preferred offering, designed to finance Bitcoin purchases as an alternative to issuing new shares that dilute stock price.
Le acknowledged the preferred stock will "take some seasoning" and marketing to pitch traders on the offering, but added: "Throughout the course of this year, we expect Stretch to be a big product for us." The timeline suggests Strategy views preferred stock as a multi-quarter funding solution rather than immediate capital source.
STRC reclaimed its par value of $100 at Wednesday's trading close for the first time since mid-January, which Le characterized as the "story of the day." The stock had dipped below $94 earlier this month as Bitcoin crashed under $60,000, creating concerns about the preferred instrument's stability during market volatility.
With STRC now trading at par, the price Strategy designated as its minimum, the company could resume offering shares to fund additional Bitcoin purchases. Bitcoin has traded mostly flat over the last 24 hours at approximately $66,800, down from an intraday high exceeding $68,000.
Analysts have warned the cryptocurrency treasury sector is becoming crowded as companies compete for a limited segment of traders, leading to situations where some companies' cryptocurrency holdings are worth more than the companies themselves. The valuation disconnect has prompted speculation about consolidation opportunities.
Some analysts suggested rival treasury firms could move to acquire underperforming companies to obtain Bitcoin at discounted valuations, but Le stated Strategy isn't interested in such acquisitions. "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. "I think it would be a distraction to go buy, at a discount to net asset value, another digital asset treasury company."
The comments suggest Strategy intends maintaining focus on Bitcoin accumulation rather than diversifying into platform consolidation or expansion into adjacent business lines. Shares in Strategy (MSTR) ended Wednesday trading down over 5% at $126.14, underperforming broader market indices.
