Strategy (MSTR) has introduced a new way to raise funds from capital markets to continue purchasing bitcoin (BTC), but there are signs that the flow of funds from Wall Street may be slowing down.
The company’s latest offering, Perpetual Strife Preferred Stock (STRF), provides investors with a fixed 10% annual cash dividend, paid quarterly, according to a recent SEC filing. If dividends are not paid, they will compound at an additional 1% per year (quarterly), up to a maximum of 18%. The first dividend payment is set for June 30, 2025.
Initially, Strategy’s preferred series (STRK) offered an 8% interest rate, while its convertible debt offerings came with minimal or even 0% interest rates. Unlike common stock, holders of STRF do not have voting rights but do have priority in liquidation with a $100 per share liquidation preference. Strategy also has the right to redeem STRF if fewer than 25% of the original shares remain or in the event of tax events, while holders can demand a buyback in case of a fundamental change.
STRF is expected to be traded on Nasdaq within 30 days of issuance, offering investors exposure to bitcoin with a high-yield structure. The offering is being managed by Morgan Stanley, Barclays, Citigroup, and Moelis & Company under an SEC shelf registration.
While Strategy has been buying bitcoin at a rapid pace in recent months, its fundraising and token acquisitions have slowed down in the past few weeks. Last week, the company made additional bitcoin purchases, acquiring 130 BTC for $10.7 million, bringing their total holdings to 499,226 tokens.
In early trading on Tuesday, MSTR was down by 5%, following a general market decline and a dip in bitcoin’s price from $84,000 to $81,300.
Overall, Strategy’s innovative approach to raising funds for bitcoin purchases through the issuance of STRF demonstrates its commitment to expanding its holdings in the cryptocurrency market. Investors will be watching closely to see how this latest offering performs in the market and whether it attracts sufficient interest from both retail and institutional investors.