MicroStrategy's perpetual preferred equity, known as "Stretch" (STRC), has reclaimed its $100 par value for the first time since mid-January. This milestone is significant as it allows the company, the world's largest corporate Bitcoin holder, to resume at-the-market (ATM) offerings to fund further acquisitions of Bitcoin (BTC). STRC last traded at par on January 16, when Bitcoin was near $97,000. As BTC subsequently retreated to lows around $60,000 by February 5, STRC dipped to $93 before its recent rebound.
In a strategic move to manage volatility, MicroStrategy is expanding its use of this preferred stock instrument. As CEO Phong Le explained in a February 12 interview with Bloomberg, the "Stretch" product is designed to attract investors seeking crypto exposure with lower risk. The stock pays a variable monthly dividend, recently reset to an 11.25% annual yield, and its structure aims to keep trading close to the $100 par value to limit sharp price movements.
This funding approach comes as MicroStrategy's common stock (MSTR) remains highly correlated to Bitcoin's price swings. On Wednesday, MSTR common stock slid 5% to close at $126, reflecting pressure as Bitcoin traded around $67,500. Over the past three weeks, the company has raised approximately $370 million through common stock sales and an additional $7 million via preferred shares, using the proceeds to buy more Bitcoin. This has pushed MicroStrategy's total holdings above 714,000 BTC, valued at roughly $48 billion.
The company views preferred shares as a key tool to strengthen its balance sheet, reduce refinancing risk compared to convertible bonds, and limit dilution for existing shareholders. Co-founder Michael Saylor has reiterated the firm's commitment to continue quarterly Bitcoin purchases with no plans to sell. The strategy targets institutional investors like pension funds and insurers who prefer predictable returns, providing a steadier funding avenue for MicroStrategy's ongoing Bitcoin accumulation strategy.
