Strategy is moving away from issuing common stock to purchase Bitcoin and is now focusing on preferred shares to finance cryptocurrency investments. CEO Phong Le announced this strategic shift as a way to protect the value of existing common shares while attracting investors to its new offering.
"We're beginning the transition from common equity to preferred capital," Le said on Bloomberg's The Close. "This approach allows us to grow our cryptocurrency portfolio without diluting shareholder value."
Preferred Shares Take Center Stage
In July 2025, Strategy launched its fourth series of perpetual preferred shares, called Stretch (STRC). These shares offer an annual dividend yield exceeding 11%, targeting investors seeking consistent returns and stability in volatile markets.
STRC recently regained its par value of $100 at the close of trading on February 11, the first time since mid-January. Earlier this month, shares had fallen below $94 amid Bitcoin’s decline to $60,000.
Returning STRC to par value positions Strategy for new share offerings, with the company setting $100 as the minimum price for future purchases to fund Bitcoin acquisitions.
Bitcoin itself has traded largely unchanged over the past 24 hours at around $66,800, down from an intraday high above $68,000.
Focused Growth Without Distractions
Le acknowledged that preferred shares require time to mature and careful marketing to attract investors. "Over the course of this year, we expect Stretch to become a key product for our financing strategy," he added.
Analysts warn that the market for corporate Bitcoin reserves is becoming crowded, with companies competing for a limited pool of investors. In some cases, a company’s crypto holdings exceed its market capitalization, creating opportunities for acquisitions. However, Strategy has confirmed it will not pursue such deals.
"I think in any new market, whether it's electric vehicles or artificial intelligence, focusing on the core product is key," Le explained. "Buying another digital asset company at a discount would distract from our strategy."
Strategy (MSTR) shares closed down more than 5% at $126.14 on February 11.
Key Considerations
From a financial perspective, Strategy’s pivot to preferred shares highlights the classic challenge of financing growth while maintaining shareholder value. With an 11% annual dividend yield on STRC, investors gain potential returns above current Fed interest rates of 5.25-5.5%. However, the strategy also introduces ongoing obligations even if Bitcoin’s price drops.
Preferred shares tend to perform well in stable markets but can become a liability during prolonged downturns. Strategy is effectively positioning itself as a cryptocurrency-focused dividend fund, where success depends not only on Bitcoin appreciation but also on generating sufficient cash flow to support payouts.
The key question remains whether this model can withstand an extended crypto winter.
