Strategy is rolling out a new financial framework to stabilize its business and reassure investors amid a prolonged slump in its Stretch preferred stock, the company's primary vehicle for funding Bitcoin acquisitions.
Starting July 1, Strategy will hike the regular annual dividend rate on the preferred stock -- which trades under the ticker symbol STRC -- to 12% from 11.5%. The move aims to push shares back toward their $100 par value, targeting a steady trading range of $99 to $100 after they crashed to a record low of $73.62 earlier this month.
The company has long relied on the high-yielding equity as its primary engine to bankroll Bitcoin acquisitions. When STRC trades around above $100, Strategy can easily generate capital by issuing new shares to buy more of the cryptocurrency. However, STRC has been falling further from that target price.
As a defensive buffer against this volatility, Strategy is relying on a $2.55 billion USD reserve strictly locked down to fund its $1.76 billion in annual dividend and interest obligations. This pool provides roughly 17.4 months of coverage, safely exceeding the board-mandated minimum of 12 months' worth. Any alternative use of these funds requires board approval.
Strategy has authorized sales of Bitcoin to raise up to $1.25 billion to pad the reserve, bringing total potential liquidity coverage to $3.8 billion, or around 26 months' worth. The proceeds will also be used to cover dividends and interest payments, if selling Bitcoin is a better move than issuing common stock, and to fund the newly announced stock and security buyback programs.
The company separately approved a plan to repurchase up to $1 billion of its common stock. Instead of constantly issuing new stock to raise money, Strategy plans to buy and sell its own shares depending on what makes the most financial sense at the time.
Benchmark analyst Mark Palmer noted that, crucially, the buybacks won't be funded from the USD reserve. Separating the two means that Strategy can hunt for opportunistic stock buybacks without weakening its shield against market volatility.
Strategy has transformed dramatically since its founding as a software firm in 1989. While the company still sells software, that legacy business now generates negligible revenue. Strategy announced in 2022 that it was adopting Bitcoin as its primary reserve asset. Today, Strategy stock is widely held as an investment vehicle offering exposure to the crypto.
CEO Phong Le on Monday stated that Strategy was shifting from issuing capital to actively managing it. Randy Binner, an analyst at Texas Capital Securities, says this new focus aligns with his view of Strategy as "an alternative asset manager and software provider."
The authorization of Bitcoin sales caught Binner's attention, and for good reason. Strategy stock slid earlier this month after the company executed the first strategic Bitcoin sale in its history. Before that, the company had sold Bitcoin only once, in 2022, for tax purposes.
The transaction broke with the longtime mantra of Strategy's executive chairman, Michael Saylor, who swore the company would never sell crypto. CEO Phong Le clarified at the time of Strategy's most recent earnings report in May that the company would consider Bitcoin sales "when it is advantageous to do so."
While Binner anticipates "the crypto community will have a lot to say about this," he believes selling Bitcoin "makes economic sense, and it is good they are defining the size of this program." He adds that the move shouldn't materially impact Bitcoin's price, even though Strategy remains the world's largest corporate holder of the crypto.
Strategy disclosed on Monday that it refrained from purchasing any Bitcoin over the preceding six-day period. However, the company raised $1.15 billion in gross proceeds by selling roughly 12.7 million shares of common stock. Strategy's total Bitcoin cache now stands at 847,363 tokens, valued at roughly $50.3 billion on Monday.
Strategy shares rose 3%, trailing STRC preferred, which gained 4.2%. The benchmark S&P 500 ticked up 0.5%.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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(END) Dow Jones Newswires
June 29, 2026 11:31 ET (15:31 GMT)
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