The two-week-old preferred shares issued by Michael Saylor-led Strategy Inc. MSTR have been seven times more liquid, outperforming its peers by 19%. However, according to an analysis, “yield is very high”.
What Happened: Saylor is the founder and chairman of the Bitcoin BTC/USD treasury company, erstwhile known as MicroStrategy, which issued 7,300,000 shares of 8.00% Series A Perpetual Strike Preferred Stock at $80.00 per share STRK on Jan. 31.
According to the Bloomberg data shared by Saylor in a graphic via an X post, these preferred shares demonstrate significantly higher liquidity than their peers, boasting seven times the trading volume. Additionally, these shares have outperformed the other preferred equity by “~19% over the first two weeks of trading”.
Comparing the first two weeks of other preferred shares since 2022, STRK’s mean return has been 17.6% higher while others have declined by 1.1%. Also, the average dollar trading volume of STRK’s face value has been at $46 a piece, which compares to the mean of $6 per share for other preferred equity over the first two weeks of their listing.
Why It Matters: This preferred stock offering follows Strategy’s recent Bitcoin acquisitions and reinforces the company’s strategy of leveraging its market position to accumulate more of the cryptocurrency.
An analysis by Market Beat says that “An increase in the price of the preferred shares will push the yield down, and a drop in price will push the yield”
Despite the increase in STRK value by 16.10% to $94.04 apiece since inception, the note stated that “Yield is very high. It is significantly above many preferred equity ETFs that are closer to 6%.”
“Additionally, it is a way to indirectly wager on the price of Bitcoin due to Strategy’s common stock correlation with the crypto,” it added.
Strategy held an aggregate of approximately 478,740 bitcoins as of Feb. 10. These coins represent 2.28% of the total supply of all Bitcoins which were acquired at an aggregate price of $31.1 billion and an average purchase price of approximately $65,033 per coin, according to its SEC filing. The holdings were valued at $46.148 billion, as per BiTBO.
Price Action: MSTR rose by 3.94% on Friday and advanced further by 0.24% in after-hours. The exchange-traded fund tracking the Nasdaq 100 index, Invesco QQQ Trust, Series 1 QQQ rose by 0.42% to close at $538.15 on the same day.
MSTR shares have gained 12.57% on a year-to-date basis, whereas it was up by 379.05% over the last year.
The average price target among 14 analysts tracked by Benzinga is $494.93 with a ‘buy' rating. The estimates range from $140 to $690 apiece. Recent ratings from Barclays, Keefe, Bruyette & Woods, and Maxim Group suggest a $493.67 target, implying a potential upside of 45.82%.
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Photo courtesy: MicroStrategy
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