Strategy Preferred Stock Financing Structure Stabilizes, May Support Increased Bitcoin Holdings

StoneX and TD Cowen analysts believe that the stabilization of Strategy's preferred stock financing structure and improved liquidity have created conditions for the company to resume increasing its Bitcoin holdings and raise its per-share Bitcoin ownership. Both institutions maintain a buy rating, with target prices of $435 and $260, respectively. As of the end of the third quarter, Strategy held $5.07 billion in dollar assets, including cash reserves of $4.83 billion, which can cover approximately 3.2 to 3.4 years of preferred stock dividends and debt interest. Strategy has also spent about $2 billion to repurchase STRC preferred stock, helping its price rebound to near the $100 par value. However, due to prioritizing funds for replenishing cash reserves and supporting preferred stock rather than increasing Bitcoin holdings, Strategy's per-share Bitcoin ownership has decreased by 3.7% this year. Additionally, shareholders of STRC, STRF, STRK, and STRD preferred stocks have approved daily accrual of dividends: STRC will take effect from November 1, while the other three classes will take effect from January 1 next year. Management stated that this move aims to reduce volatility, improve liquidity, and expand demand. TD Cowen believes that broader sales channels and better liquidity may ultimately enhance the efficiency of Strategy's issuance of digital credit products.

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