"Michael Saylor is raising the stakes for almost everyone that is touched by his multibillion dollar bet on Bitcoin. The head of the digital asset treasury firm Strategy Inc. is boosting the yield on the preferred shares that he's designated as the company's primary source of funding going forward to help shore up faltering demand and keep the gambit going."
"Even though Bitcoin reached a record high during the third quarter and dozens of public firms copied the treasury company model Saylor pioneered five years ago, investors have begun to question the tactic. Shares of Strategy have tumbled around 45% since the stock closed at a record high last November, erasing much of the premium the shares long enjoyed over its Bitcoin holdings for the past few years."
"At the same time, the preferred shares have drawn tepid demand. Recent sales have fallen well short of Saylor's ambition for blockbuster capital raising, prompting a slowdown in the pace of Bitcoin purchases in recent weeks. Strategy is also looking to international markets to raise capital and considering launching exchange-traded funds underpinned by the preferred shares, Chief Executive Officer Phong Le said during the call. Strategy has around $689 million annually in interest and dividend expenses."
Strategy Inc. will increase the yield on its Variable Rate Series A Perpetual Stretch Preferred Stock (STRC) by 25 basis points to 10.5% in November. The company reported $2.8 billion in net income for the quarter after an unrealized gain tied to its roughly $70 billion cryptocurrency holdings. Despite Bitcoin reaching a record high, Strategy shares have fallen about 45% since last November, reducing the premium over its Bitcoin holdings. Preferred-share demand has been tepid, recent sales undershot capital-raising goals, and Bitcoin purchases have slowed. Strategy is exploring international markets and potential ETFs linked to the preferred shares and carries about $689 million in annual interest and dividend expenses.
Read at Fortune Crypto
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