Strategy plans to expand issuance of perpetual preferred stock as its common shares fall and its Bitcoin-heavy balance sheet comes under pressure.
The company’s stock, trading under the ticker MSTR, is down about 17% year to date and currently trades below its net asset value as Bitcoin prices weaken.
Chief executive Phong Le said the preferred shares, branded “Stretch,” are designed to offer exposure to digital capital with less volatility than common equity.
“We’ve engineered something to protect investors who want access to digital capital without that volatility and that’s Stretch,”
Le told Bloomberg, adding:
“To me, the story of the day is Stretch closes at $100 exactly how it was engineered to perform.”
The perpetual preferred shares carry a variable dividend currently set at 11.25%, reset monthly to help maintain trading near the $100 par value, and following the announcement the MSTR share price was down 5% on Wednesday.
Strategy holds 714,644 Bitcoin and recently purchased more than 1,000 additional coins, but with Bitcoin trading near $67,422 versus an average purchase price of roughly $76,056, the company faces an unrealised loss of about $6.1 billion and a diluted mNAV of around 0.95x.