The bitcoin-treasury company priced an upsized offering of perpetual preferred stock with a 15% dividend at $90, well below its $100 face value, to raise about $630 million before fees. The yield shows what this kind of capital now costs.
Strive sold more stock than it set out to on Thursday night. The price of that money tells investors how expensive it has become to fund corporate bitcoin buying.
The bitcoin-treasury company priced an initial public offering of 7 million shares of its 15% Series A perpetual preferred stock, which it calls SATS, at $90 a share. The deal was upsized by 2 million shares, or 40%. Before underwriting costs, the sale brings in roughly $630 million. Settlement is scheduled for Oct. 20.
Strive listed bitcoin and bitcoin-related products first among the possible uses, alongside working capital, income-producing assets, capital spending and repurchases of its Class A shares.
The real cost
The preferred carries a 15% dividend on a $100 stated value, so the $700 million figure that has circulated is the face amount, not the cash raised. Because investors paid $90, the effective yield at issue is about 16.7% before fees.
For comparison, preferred stock issued by another treasury company, DeFi Development, carries a 14% coupon. Strive's cost is higher still.
Perpetual preferred stock never has to be repaid, which spares the company a maturity wall. In exchange, it carries a dividend that in principle runs forever. Dividends are paid when declared, and the first is scheduled for Nov. 9.
Strive, which reports holding about 35,600 bitcoin, closed Thursday at $25.65, up 3.93%, and was roughly flat after hours.
Why treasury companies use preferreds
The original treasury-company model relied on selling common stock at a premium to the value of the bitcoin a company held, then using the proceeds to buy more. When that premium shrinks, issuing common shares no longer adds bitcoin per share, and companies turn to preferred stock and other instruments to keep buying.
Preferred stock has become one of the main channels through which these companies fund their purchases. Its price is effectively a gauge of how much capital the channel can still supply.
The timing adds a twist. Strive priced its deal hours after MSCI said it would bar "non-operating" companies from its indexes, a rule aimed at the same group of companies.
Market implications
One reading is that demand is strong. A 40% upsize shows appetite for high-yield, bitcoin-linked securities despite the MSCI decision and weak flows into bitcoin exchange-traded funds.
A second reading is that the coupon reflects stress. Paying an effective 16.7% on perpetual capital requires bitcoin to appreciate faster than that, on average, just to keep pace, and a drawdown would test dividend coverage.
A third reading is neutral. The $90 price is a discount to face value rather than a sign of distress, and $630 million is modest next to the roughly $31 billion of bitcoin that trades in a day, by one measure.
What to watch
Settlement on Oct. 20, any disclosure of bitcoin purchased with the proceeds, the first dividend on Nov. 9, and where the SATS preferred trades relative to $90. A slide well below the issue price would signal the channel is saturating.