Understanding Strategy Preferred Stocks | Who gets compensated first?

On Jul. 21, 2025, Strategy offered yet another perpetual preferred stock. It’s called Stretch. It was introduced less than two months after the launch of another Strategy’s perpetual, Stride. Two other perpetuals are Strike and Strife, launched in January and March, respectively. It’s important to realize how different these stocks are and what their differences are from Strategy’s common stock, MSTR.

Strategy’s preferred stocks

Stretch, Stride, Strike, and Strife are the preferred stocks launched to facilitate Strategy’s long-term Bitcoin acquisition. The company has ambitious plans to gather $84 billion in two years. Dare bets aim to impress potential investors and attract more capital while creating additional burdens, as the company should pay dividends to the holders of preferred shares.

Preferred stocks usually don’t grant holders voting rights or limit them. Preferred stocks give holders a share in the company and the right to earn from the company’s capital. These stocks are reminiscent of bonds as owners get dividends for the shares held. More than that, in the event of bankruptcy of the company, holders of preferred stock are paid before common stockholders. However, its bondholders have a top priority in such situations.

While some of the investors met the new asset with interest, others saw it as “a stretch.” Critics consider Strategy shares to be risky. The company needs to keep the dividend payments in a precise and timely manner. The more preferred shares the company offers to raise money, the more dividends it must pay. It increases the pressure on its balance sheets that tightly depend on the Bitcoin price.

Stretch

Initially, Strategy offered $500 million worth of Stretch (STRC) on Jul. 21, 2025. On Jul. 25, the offering was elevated to $2.5 billion. The company offered around 28 million STRC shares. Timing of the Stretch launch indirectly confirms it as on Jul. 29. Strategy bought 21,021 BTC, spending a whopping $2.46 billion on it.

The new Series A Stretch perpetual stock offers adjustable 9% annual dividend payouts. Dividends are paid once every month. It makes STRC unique as dividends for the rest of the preferred shares are paid out quarterly. The company is adjusting the stock price, aiming to keep the stock’s price around $100. Other features include the at-the-market issuance (meaning that Strategy can always sell more STRC, diluting the asset) and the call option feature.

Stride

Stride (STRD) was offered on June 3. Unlike Stretch, Stride is a noncallable perpetual stock. It has an annual 10% dividend paid once in a quarter. Just like STRC and STRK, Stride has an ATM program, and Strategy can always sell more STRD shares.

Just like Stretch these days, the emergence of Stride was met ambiguously as critics were warning about the possibility that Strategy may have to sell its Bitcoin holdings to pay dividends to its shareholders. Some even claimed STRD has “Ponzi vibes” as money raised through MSTR sales may be used to pay dividends to the holders of the preferred stock.

Strike

Strike (STRK) was the first of Strategy’s preferred perpetuals with 8% annual dividend payouts. The offering took place in early January 2025 when the company offered 2.5 million STRK shares. Strike shares are convertible. Investors may convert them to Strategy’s common stock, MSTR, at a 10:1 ratio whenever they wish. 

Strife

In March 2025, Strategy started selling 8.5 million Strife shares (STRF). STRF shares grant holders 10% annual dividends paid quarterly. The dividend payment may rise, reaching up to 18%. As Strife has no ATM program, Strategy cannot release more STRF shares to the market.

MSTR common stock

MSTR common stock appeared long before the Bitcoin pivot of MicroStrategy and even before the creation of Bitcoin itself. The company sold 36 million MSTR back in 1998. MSTR stockholders are partial owners of Strategy. 

Vanguard Group Inc., Capital International Investors, and BlackRock Inc. are the biggest holders of MSTR common stock. They hold between five and 7.8 percent of MSTR.

Who gets compensated first?

In the event that Strategy is facing financial problems and has to sell its Bitcoin reserves, the first people to get payments will be Strategy’s bondholders. Then, the payouts will hit the pockets of the preferred stockholders. The seniority of these stocks determines the priority among them. The first ones will be Strife holders, then Stretch holders, Strike holders, and finally Stride holders. The last in line will be MSTR holders. MSTR may have the biggest correlation with BTC prices, but the holders risk more than the holders of the preferred stock. 

While Strategy is using a sophisticated system to protect its assets if the BTC price volatility increases, there is a risk that, as soon as weaker Bitcoin treasuries start to go bankrupt, it may cause panic that will end up harming Strategy investors’ well-being as well, so it’s always important to get prepared for possible turbulence beforehand.