Strategy Aims to Raise $2.1 Billion Through Preferred Stock Issuance

Strategy, formerly known as MicroStrategy, has announced its intention to raise $2.1 billion through the issuance of additional preferred stock. This initiative is part of the company's broader strategy to diversify its funding sources and attract a new class of investors. The preferred stock in question, known as Perpetual Strife Preferred Stock (STRF), was first introduced in March and offers a 10% annual cash dividend. This product is exclusively available to institutional investors and includes an escalation mechanism that increases payouts if the company misses payments.

The offering is designed to provide a low-volatility investment option that complements Strategy's other fundraising initiatives. These include plans to raise $21 billion through the issuance of Strategy’s Perpetual Strike Preferred Stock (STRK) and an additional $21 billion by issuing the firm’s common shares. Unlike the company's previous STRF offering, which was upsized from $500 million to $723 million, the new preferred shares will be sold at their market price on the Nasdaq. According to a video posted by Strategy President and CEO Phong Le, the price of STRF has increased by 16% to $99.8 from its launch price of $85 per share.

Michael Saylor, co-founder and Executive Chairman of Strategy, described STRF as "the crown jewel of our preferred strategy." He emphasized that the company is being selective about the amount of STRF it issues, acknowledging that $2.1 billion is a modest raise compared to other fundraising efforts. Saylor highlighted that STRF is aimed at attracting investors who may be uncomfortable with the volatility of Bitcoin or convertible debt. He believes that as the market becomes more comfortable with Bitcoin and Strategy's preferred strategy, investors will recognize the value of these instruments.

Strategy is the world’s largest corporate holder of Bitcoin, with a holding of 576,000 Bitcoin worth approximately $64 billion. Earlier this week, the company announced that it had added around $764 million worth of Bitcoin to its corporate holdings. This move underscores the company's commitment to Bitcoin and its belief in the asset's long-term potential. The issuance of STRF is seen as a strategic move to unlock a new class of investors who might not be comfortable with the volatility associated with Bitcoin or other high-risk investments. By offering a more stable investment option, Strategy aims to broaden its investor base and secure additional funding for its operations.