MicroStrategy Unveils Perpetual Preferred Stock Offering, Drawing Institutional Interest
MicroStrategy (MSTR), a company renowned for its innovative approaches to raising capital for its massive Bitcoin (BTC) acquisitions, has introduced a new financial instrument to attract institutional investors. Led by Executive Chairman Michael Saylor, the company launched its perpetual preferred stock offering (STRK) this week, marking the latest creative step in its capital-raising strategy.
Preferred stock, positioned between equity and debt on a corporate balance sheet, offers investors the regular income of bonds while also providing an ownership stake in the company.
Ben Werkman, a prominent analyst following MicroStrategy, shared on X his perspective on the appeal of preferred stock for institutional investors, citing its lack of maturity risk, stable yield, and potential for equity upside.
“I could see a scenario where [preferred stock] begins to replace some of the convertible bonds in fixed-income accumulation due to its lack of maturity risk,” Werkman noted. “Preferred stock could be significantly more accretive than any convertible offering and definitely more so than [equity sales].”
Jeff Park, Head of Alpha Strategies at Bitwise Investments, echoed similar thoughts, describing MicroStrategy’s preferred stock offering as one of the most compelling investment opportunities in the market.
“STRK is a near-perfect instrument,” Park wrote. “It offers two ways to win: First, if interest rates drop, it benefits the principal; second, if MicroStrategy’s value rises, investors can convert and own a higher volatility asset or simply sell.”
The largest U.S. preferred stock ETF, BlackRock iShares Preferred and Income Securities ETF (PFF), manages around $15 billion in assets. The top holders of PFF include major corporations like Boeing (BA), Wells Fargo (WFC), and Citi Group (C).
MicroStrategy is set to announce the final pricing details of its new offering after the market closes on Thursday.
