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The preferred stock carries a 10% annual dividend, payable quarterly in cash. If the company fails to make a dividend payment, unpaid amounts will compound at an increasing rate, potentially reaching as high as 18% per year.
Strategy (MSTR) shares slipped more than 1.5% in midday trading on Friday after the Michael Saylor-led company announced plans to raise approximately $711 million through a preferred stock offering to expand its Bitcoin (BTC) holdings.
The company is issuing 8.5 million shares of its Series A Perpetual Strife Preferred Stock (STRK) at $85 apiece. Initially targeted at $500 million, the offering was upsized due to strong investor demand.
The preferred stock carries a 10% annual dividend, payable quarterly in cash. If the company fails to make a dividend payment, unpaid amounts will compound at an increasing rate, potentially reaching as high as 18% per year.
Strategy intends to use the net proceeds for general corporate purposes, including further Bitcoin acquisitions and working capital, according to the filing with the U.S. Securities and Exchange Commission (SEC).
The Bitcoin proxy, which already holds close to 500,000 BTC, continues to expand its cryptocurrency reserves aggressively.
Meanwhile, Bitcoin’s price has fallen by over 12% in the past month, trading just under $84,000 during U.S. market hours.
Strategy’s capital raise follows a recent transaction in which Strategy purchased 130 BTC for approximately $10.7 million, funded by issuing shares from a previous preferred stock offering.
Despite the company’s ambitious expansion, analysts and retail investors have raised concerns about its declining liquidity ratios, questioning its ability to manage long-term financial obligations.
On Stocktwits, retail sentiment around Strategy’s stock improved but remained in ‘neutral’ territory.
Users expressed skepticism about the offering, highlighting concerns over Strategy's reliance on Bitcoin.
One user pointed out that the company continues to borrow money, issue shares, and distribute dividends despite having no traditional revenue streams.
Strategy shares have traded flat this year but have gained over 86% over the past 12 months.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<
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