Michael Saylor Builds Out His Own Yield Curve With Upsized Preferred Stock Sale
MicroStrategy’s Aggressive Bitcoin Acquisition Strategy Fueled by $2.5 Billion Preferred Stock Offering
MicroStrategy (MSTR), under the leadership of Michael Saylor, has significantly expanded its Bitcoin holdings through a substantially upsized preferred stock offering. The company issued 28 million shares of its new STRC (Stretch) preferred stock at $90 per share, raising a total of $2.5 billion. This surpasses the initially announced target of $500 million, highlighting MicroStrategy’s unwavering commitment to Bitcoin acquisition.
STRC represents a notable addition to MicroStrategy’s existing preferred stock portfolio (STRD, STRF, STRK), strategically enhancing its credit yield curve. This senior, perpetual preferred stock offers a variable monthly dividend, aiming to attract yield-seeking investors prioritizing stability. At issuance, STRC boasted an attractive effective yield of 9.5%–10.0%, significantly exceeding returns from money market funds and Treasury bills.
The structure of STRC incorporates mechanisms designed to maintain price stability near par value ($100). These include adjustable dividend rates, secondary issuance windows, and call options. Should the stock price fall below $99, MicroStrategy can increase dividends and halt sales. Conversely, if the price rises above $101, the company can issue new shares or call the existing stock. This self-correcting system aims to provide attractive returns while mitigating price volatility. Dividend reductions are capped at a maximum of 25 basis points plus any decline in the one-month secured overnight financing rate (SOFR).
Compared to traditional short-duration credit options like commercial paper and bank deposits, STRC offers a compelling alternative for investors seeking higher yields with reduced price risk. Its more than double the yield of money market funds and Treasury bills, making it a competitive choice in the current interest-rate environment. The successful upsizing of the STRC offering underscores MicroStrategy’s proactive approach to financing its Bitcoin acquisition strategy. The company’s aggressive pursuit of Bitcoin, coupled with its innovative financing solutions, continues to shape its unique investment strategy.
