Strategy announces $21 billion STRK at-the-market program

Strategy, the world’s largest Bitcoin treasury company, announced today a significant expansion of its capital raising capabilities through a new $21 billion at-the-market (ATM) offering program for its 8.00% Series A Perpetual Strike Preferred Stock (STRK). This move represents one of the largest ATM programs in corporate history and further solidifies Strategy’s position as a pioneer in Bitcoin-backed financial instruments.

Understanding the STRK at-the-market offering

The company has entered into a sales agreement that will allow it to issue and sell shares of its perpetual strike preferred stock with an aggregate offering price of up to $21 billion. These preferred shares come with an 8.00% annual dividend and are convertible by holders into Strategy’s Class A common stock.

According to the press release, Strategy plans to execute sales of the STRK preferred stock “in a disciplined manner over an extended period, taking into account the trading price and trading volumes of the perpetual strike preferred stock at the time of sale.” This approach suggests a careful, strategic capital raising process rather than a single large issuance.

The company intends to use the net proceeds from this ATM program primarily for “general corporate purposes, including the acquisition of bitcoin and for working capital.” Given Strategy’s established pattern of Bitcoin accumulation, it’s reasonable to expect that a significant portion of the funds raised will be directed toward increasing the company’s already substantial Bitcoin holdings of 499.096 BTC.

STRK preferred stock: A unique financial instrument

Strategy’s STRK preferred stock represents one of the company’s financial innovations in the Bitcoin-backed securities space. Introduced in early 2025, these shares offer several attractive features for investors.

Key characteristics of STRK preferred stock:

• 8.00% fixed annual dividend based on a $100 liquidation preference
• Convertible by holders into Strategy’s Class A common stock
• Provides a balance of fixed income returns with potential Bitcoin-linked upside
• Creates a new entry point for investors seeking Bitcoin exposure with income

The STRK preferred shares feature what’s called a “perpetual strike option” that gives holders the right to redeem their shares for either $100 per share (the liquidation preference) or 10% of one Strategy share, whichever is more valuable. This creates a unique dynamic where the conversion becomes increasingly attractive if Strategy’s share price exceeds $1,000.

Strategic implications for Bitcoin accumulation

This massive ATM program significantly expands Strategy’s arsenal for Bitcoin acquisition, potentially enabling it to continue increasing its Bitcoin per share (BPS) metric and Bitcoin yield.

Financial engineering to increase Bitcoin holdings

Strategy has consistently utilized financial engineering to increase its Bitcoin holdings through several mechanisms:

1. Bitcoin yield generation: The company has focused on increasing Bitcoin per share through what it calls “Bitcoin yield” – the percentage increase in Bitcoin holdings relative to share dilution. This ATM program could potentially continue the company’s track record of Bitcoin yield growth, which stands at +6.86% year-to-date.

2. Leveraging capital markets: By issuing preferred stock at fixed dividend rates, Strategy can raise substantial capital for Bitcoin purchases without the immediate dilution that would come from common stock issuance.

3. Building on financial flywheel: This offering continues Strategy’s self-reinforcing flywheel where it raises capital, acquires more Bitcoin, increases its market cap, and gains the ability to raise even more capital.

With a current Bitcoin holdings of 499.096 BTC valued at approximately USD 41.286 bln, this ATM program could potentially allow Strategy to significantly expand its position as the world’s largest corporate holder of Bitcoin.

Market impact and investor considerations

The announcement of this ATM program will likely have several implications for investors in both Strategy’s common stock (MSTR) and its STRK preferred shares.

Potential market reactions

Markets may interpret this announcement in multiple ways:

1. Positive signal for Bitcoin accumulation: The size of this offering signals Strategy’s continued commitment to aggressive Bitcoin acquisition, potentially supporting both Bitcoin prices and investor confidence in Strategy’s approach.

2. Diversification of funding sources: By leveraging the STRK preferred stock rather than common equity or convertible debt, Strategy is diversifying its capital structure and potentially optimizing its financing costs.

3. Premium maintenance: Strategy currently trades at a premium of 1.856xx to its Bitcoin NAV. This ATM program’s execution will be watched closely for its impact on this premium.

Considerations for investors

For investors considering Strategy’s securities, this announcement highlights several key aspects:

1. Varity of instruments with different volatility: Strategy now offers multiple instruments including common stock, convertible bonds, and preferred shares, each with different risk-reward profiles.

2. Long-term Bitcoin accumulation strategy: The $21 billion size of this ATM program underscores the company’s long-term vision for continued Bitcoin accumulation, potentially over years.

3. Dividend yield opportunity: With STRK’s 8.00% annual dividend yield, income-focused investors have a new option for gaining indirect Bitcoin exposure while receiving regular dividend payments.

Key differences in dilution impact

A traditional common stock ATM offering directly increases the number of common shares outstanding, immediately diluting existing shareholders’ ownership percentage in the company. By contrast, the STRK preferred stock ATM offers several important differences:

• Delayed potential dilution: STRK shares only convert to common shares if and when holders choose to convert, often when Strategy’s common stock price exceeds certain thresholds.
• Conversion at a premium: The conversion mechanism in STRK is set at a premium to the current share price. STRK holders can convert their shares into Strategy common stock at an initial conversion rate of 0.1000 shares of common stock per preferred share. This means conversion only becomes attractive when Strategy’s share price exceeds way beyond $1,000 (since each preferred share has a $100 liquidation preference).
• Dividend vs. immediate dilution: Instead of immediate ownership dilution, STRK holders receive an 8.00% annual dividend. This creates a time value component where Strategy can deploy the capital for Bitcoin acquisition before any potential conversion occurs.

Comparative capital raising efficiency

Strategy’s regular common stock ATM offerings directly increase the share count, which can be measured by looking at the basic shares outstanding, currently at 260.286 mln. These traditional ATM offerings have been highly effective when Strategy trades at a significant premium to its Bitcoin NAV (currently 1.643x). However, the STRK ATM potentially offers even greater capital raising efficiency by:

• Separating immediate fundraising from dilution: The company can raise cash now while potentially deferring actual common share dilution until a future date when the stock price is higher.
• Attracting different investor pools: STRK appeals to income-focused investors who might not otherwise purchase Strategy’s common stock, expanding the company’s potential capital sources.
• Creating a hybrid funding instrument: The 8.00% dividend cost is higher than Strategy’s ultra-low convertible bond interest rate ( 0.373%), but potentially more efficient than direct equity issuance during periods of market weakness.

Expanding the Bitcoin treasury model

This latest move further cements Strategy’s leadership in corporate Bitcoin adoption and financial innovation. The company has evolved rapidly from a business intelligence software provider into what Executive Chairman Michael Saylor has described as potentially becoming “the Amazon of fixed income” - creating a marketplace for Bitcoin-backed financial instruments.

Conclusion: A new chapter in Strategy’s Bitcoin journey

With today’s announcement of a $21 billion STRK ATM program, Strategy continues to push the boundaries of corporate Bitcoin adoption and financial innovation. This program provides the company with unprecedented firepower for Bitcoin acquisition, potentially allowing it to significantly expand its position as the world’s largest corporate Bitcoin holder.

For investors, Strategy continues to offer unique exposure to Bitcoin through multiple financial instruments, each with different risk-reward profiles. The STRK preferred shares in particular provide a blend of fixed income returns with Bitcoin-linked upside potential that isn’t available elsewhere in traditional financial markets.

As Strategy executes this ATM program over time, market observers will be watching closely to see how it impacts the company’s Bitcoin holdings, financial metrics, and market valuation. One thing is clear - Strategy’s journey as the pioneering Bitcoin treasury company continues to evolve in bold and innovative ways.