Strategy’s Preferred Stock STRK Rises 3% Amid MSTR’s 20% Decline
Strike (STRK), the preferred stock from Strategy (MSTR), has risen 3% since its February 5 introduction, while MSTR's common stock has declined by 20% in the same period.
- Preferred stock combines characteristics of equity and debt.
- STRK offers greater rights to dividends and assets during liquidation compared to common stock.
- It pays a fixed dividend and lacks a maturity date.
- STRK shows 26% correlation with MSTR and -7% with bitcoin.
- STRK's volatility is 49%, lower than bitcoin's 60% and MSTR's over 100%.
Strategy announced a $21 billion at-the-market (ATM) offering for STRK, potentially resulting in an annual dividend obligation of about $1.68 billion if fully sold. Funding could come from operational cash flow or convertible debt, as selling common stock is unlikely due to its low price.
- STRK provides an 8% annual dividend yield based on a $100 liquidation preference.
- Currently priced at $87.45, it offers an effective yield of around 9%.
- Each STRK share can be converted into 0.1 share of common stock if MSTR reaches $1,000.
- MSTR closed at $262.55, indicating significant price appreciation is needed for conversion.
STRK presents a stable income-generating option with potential upside, though the ATM offering may affect its performance, similar to impacts seen in common stock.