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- Strategy announces a 3.5M share offering to fund Bitcoin acquisitions, targeting European investors.
- STRE preferred stock offers a 10% annual dividend, paid quarterly, with higher liquidation priority.
- Despite holding 641,205 BTC worth $68.39B, the company struggles with stock price declines.
Strategy, the company co-founded by Michael Saylor, has declared an initial euro-denominated preferred stock issuance. The company will offer 3.5 million shares of its 10% Series A Perpetual Stream Preferred Stock. The decision will fund the purchase of additional Bitcoin and targets the institutional investors in Europe.
The stocks will be traded under a ticker named STRE. These preferred shares are non-voting, whereas the common stock (MSTR) has the right to vote. Nevertheless, they have a higher status in the capital structure of the company. Preferred shareholders will receive payment ahead of the common shareholder in the event of liquidation.
The offering will offer a 10% yearly dividend payment, which would be paid quarterly, beginning December 31, 2025, should the dividend be declared by the board. The funds will be expended on general corporate purposes, where a big size of the funds shall be used to purchase more Bitcoin. Strategy has maintained its approach of holding Bitcoin by actively acquiring new Bitcoin, as it initiated in 2020.
Strategy Accumulates Bitcoin, But Stock Price Continues to Fall
The company holds the largest company ownership of Bitcoin since it started this strategy. Currently, the enterprise holds 641,205 BTC, which is valued at about $68.39 billion, as per data from Bitcoin Treasuries, provided by Bitbo. Strategy has recently purchased 397 BTC at a price of $45.6 million. The company has been accumulating Bitcoins, which has played a major role in its financial approach.
Strategy has been struggling with its stock price, yet it owns an enormous Bitcoin treasury. The company shares dropped from above $450 to $264.67 on November 3. This decline was not largely reversed by the preferred stock offering announcement. On the announcement day, the stock declined by 1.8% and kept declining during after-hours trading.
Also Read: Ripple Launches Digital Asset Spot Prime Brokerage Services for U.S. Institutions
Bitcoin Volatility Hits Strategy’s Financial Stability
S&P Global Ratings has rated the strategy as B-minus. This rating indicates fears of its excessive dependence on Bitcoin, low liquidity, and increasing liabilities with regard to preferred stock dividends. These problems have created the issue of shareholder dilution as the company is still raising capital in the form of stock offerings.
There has also been a downward pressure on the price of bitcoin. It recently fell below $110,000, which is further raising questions about the strategy’s financial stability. Nonetheless, Strategy is still determined to pursue its strategy of acquiring Bitcoins, which reflects long-term intentions to expand.
Investors and analysts will closely observe the company’s move to the next step as the offering advances. Strategy will rely on how it solves the challenges of market volatility and the concerns of shareholders.
Also Read: Ripple’s RLUSD Surpasses $1B Milestone: What This Means for the Future of Crypto
