Strategy CEO: "Expanding digital credit and perpetual preferred stock to curb share-price volatility"

Strategy Inc, which holds a large amount of Bitcoin (BTC), said it will strengthen its digital credit products and expand issuance of perpetual preferred shares to ease concerns about share-price volatility.

On the 12th (local time), Phong Le, CEO of Strategy, said in an interview with Bloomberg TV that the company "designed a structure that can protect investors who want access to digital capital without volatility," announcing plans for additional perpetual preferred-share issuance.

Over the past three weeks, Strategy issued about $370 million in common stock and $7 million in perpetual preferred shares to fund additional Bitcoin purchases. The company currently holds more than 714,000 bitcoins, worth about $48 billion.

However, as Bitcoin prices fell, the stock also plunged. Bitcoin dropped below $67,000 on the day, down about 50% from the October peak of $125,260 last year. Strategy shares are down 17% year to date and have tumbled 73% from the all-time high recorded in November 2024.

Strategy’s perpetual preferred shares, dubbed "Stretch," currently offer a floating dividend rate of 11.25%. The dividend rate is reset monthly and is designed for the shares to trade around the $100 par value. The company aims to provide an alternative investment vehicle with lower volatility than common stock.

Strategy posted a net loss of $12.4 billion in the fourth quarter of last year. In the past, the stock traded at a high premium to the value of its Bitcoin holdings, enabling a virtuous cycle of additional share issuance → Bitcoin purchases → share-price gains. Now, with the premium effectively gone and capital-market conditions tightening, the existing model is facing constraints.

Co-founder and Chairman Michael Saylor said in a CNBC interview on the 11th that concerns the company would sell its holdings due to a Bitcoin price decline are "groundless," adding that it plans to keep buying Bitcoin every quarter.

The expansion of perpetual preferred shares is seen as an effort to reduce the burden of sharp share-price swings driven by Bitcoin volatility while maintaining a digital-asset-focused treasury strategy.