Strategy Deploys $950 Million to Buy Back Preferred Stock

Strategy, the world's largest corporate Bitcoin holder, has been buying back its perpetual preferred stock, Stretch (STRC), to drive the price back to its par value of $100. Over the past two months, Strategy deployed $950 million to purchase approximately 9.96 million shares of Stretch, representing about 18% of total trading volume during this period.

The purchases were funded by common stock sales, with roughly 80% of the buyback spending coming from such sales. This has raised concerns among analysts about shareholder dilution, as selling common shares to buy preferred shares can create persistent dilution pressure for common shareholders.

Strategy's funding strategy relies on keeping Stretch's price near its par value, and if it trades significantly below this level, new issuances would impose greater dilution on existing shareholders. The company has stated its vision of building Stretch into a sustainable financial product rather than just a fundraising tool.

In related news, Strategy resumed buying Bitcoin in late August, purchasing 4,603 coins over three weeks for $370 million. However, the impact of these purchases on market prices is likely limited, as they represent only about 1% of daily trading volume.