Strategy Favors Preferred Stock in Fundraising Shift as Appetite for Common Equity Fades

Strategy Sidesteps Dilution, Taps Preferred Stock to Fuel Bitcoin Buying Spree

Strategy (MSTR) has found a new way to keep buying bitcoin without watering down its common shareholders: it’s turning to its preferred stock.

In recent weeks, the firm has steered clear of using its at-the-market (ATM) program tied to common shares to raise capital. Instead, it’s relied exclusively on its STRK and STRF perpetual preferred shares, a move that allowed it to fund the purchase of 1,045 BTC without issuing a single new common share.

Why the pivot? The company’s share price has drifted closer to its modified net asset value (mNAV)—essentially the fair value based on its bitcoin holdings. Issuing common stock only makes sense when the price trades well above that level. When it doesn’t, dilution becomes costly.

By contrast, Strategy’s preferred stock programs offer a flexible, shareholder-friendly alternative. The breakdown of the recent raise: 59.18% of funds came from STRK, and 40.82% from STRF—both of which have posted solid returns since launch, rising 35% and 24%, respectively.

There’s also a deeper yield dynamic at play. Analyst Jeff Walton points out that effective dividend yields on the preferreds have been falling, even as benchmark rates like the 10-year U.S. Treasury hold steady near 4.5%. That’s because these preferreds behave like bonds: as their market prices rise, yields drop, making them more attractive in a flat-rate environment.

Strategy could return to common share issuance if its stock regains a strong premium—specifically, if it trades at 2x its mNAV or higher. Until then, the preferred route offers a smart, tactical way to keep buying bitcoin while protecting long-term equity value.