StoneX Senior Equity Research Analyst Mark Palmer explained that Strategy recently allocated six times more capital to buying back its Stretch (STRC) preferred stock than to purchasing Bitcoin. Specifically, the company spent $176 million on STRC buybacks compared to $29 million on Bitcoin acquisitions. Palmer identified this shift as foundational to Strategy’s fundraising model, noting that the firm’s $4.9 billion USD reserve is pushing the preferred stock price back toward par value.
The analysis addressed why Strategy has chosen not to raise the dividend rate on Stretch despite market volatility, including a sell-off in June involving institutional investors. Palmer also discussed the structural differences between perpetual preferreds and convertible notes, referencing approaches by competitors like Strive and Metaplanet’s U.S. expansion. These factors, alongside daily dividend mechanics and ex-dividend date volatility, contributed to StoneX cutting its MSTR price target to $435.
Strategy’s decision to prioritize STRC buybacks over direct Bitcoin accumulation signals a strategic pivot toward stabilizing its capital structure rather than solely expanding its asset base. By leveraging a substantial $4.9 billion USD reserve to push the preferred stock toward par, the company aims to secure its fundraising capabilities, which are critical for maintaining liquidity in a volatile market. This approach highlights the tension between aggressive treasury growth and the operational necessity of managing debt-like instruments, suggesting that balance sheet health now takes precedence over pure Bitcoin exposure metrics.
The reduction of the MSTR price target to $435 reflects growing scrutiny of how digital asset treasury companies manage their liabilities. The refusal to increase dividend rates, despite institutional selling pressure, indicates a cautious stance on cash outflows, potentially preserving capital for future acquisitions or debt paydowns. As competitors like Strive and Metaplanet explore different financial instruments such as convertible notes, the market will likely assess whether Strategy’s reliance on perpetual preferreds offers sustainable advantages or creates hidden vulnerabilities in its long-term valuation.
