Analyst: Strategy's preferred stock financing structure is stabilizing, creating conditions for resuming Bitcoin accumulation

October 30 — Analysts at StoneX and TD Cowen believe that Strategy's preferred stock financing structure is stabilizing and liquidity is improving, creating conditions for resuming Bitcoin accumulation and increasing Bitcoin holdings per share. Both institutions maintain a Buy rating, with target prices of $435 and $260, respectively.

As of the end of the third quarter, Strategy held $5.07 billion in U.S. dollar assets, including $4.83 billion in cash reserves, sufficient to cover approximately 3.2 to 3.4 years of preferred stock dividends and debt interest. The company also spent about $2 billion repurchasing STRC preferred stock, helping its price recover to near its $100 par value. However, because the company prioritized replenishing cash reserves and supporting preferred stock rather than increasing Bitcoin holdings, its Bitcoin holdings per share declined 3.7% year-to-date.

In addition, holders of STRC, STRF, STRK, and STRD preferred stock have approved daily accrual of dividends, with STRC effective from November 1 and the other three effective from January 1 next year. Management stated that the move aims to reduce volatility, improve liquidity, and expand demand. TD Cowen believes that a broader sales channel and better liquidity could ultimately improve the efficiency of Strategy's issuance of "digital credit" products.