On June 2, 2025, $MSTR issued the latest $STRD. What is it?

In simple terms, STRD preferred stock is a "Series A Perpetual Preferred Stock" designed by MSTR, with a nominal annual interest rate of 10%, but it is non-mandatory and non-cumulative in its distribution mechanism.

To put it plainly, Strategy wants to buy more $BTC, but lacks the funds. To obtain cash, they issued a special stock called $STRD. This stock will be listed separately and can be freely purchased.

The essence of STRD is to finance MSTR by lending money at an annual interest rate of 10%, but MSTR may not necessarily distribute the promised 10% interest, and if it does not distribute it, there will be no future compensation.

Although it seems absurd, this is indeed what they are preparing to do. While it is non-mandatory and non-cumulative, MSTR has also committed to timely distributions, provided that the company is profitable.

So the question arises, where does the cash to pay STRD come from?

Indeed, MSTR is currently still profitable on paper, but if the Bitcoin on the books is not sold, it is known as paper profit. The previous mention of tax issues is due to the paper profit, which is why no taxes were paid. However, if part of the BTC needs to be settled, taxes will have to be paid. So, is selling BTC a way to pay interest? Yes, but it is not the only way.

In addition to selling BTC, MSTR can also continue to raise funds and use the financing to pay the annual interest on STRD, and it seems they are planning to do just that.

What if STRD does not pay interest?

The answer is that there is no way; they have the power not to pay. However, if they choose not to pay, the secondary market price of STRD will plummet, making financing for MSTR exceptionally difficult. Therefore, investors generally believe that during a bull market, MSTR will choose to pay interest.

As for the bear market, we will deal with that when it comes.

PS: I personally believe that MSTR may consider some inventory Bitcoin strategies, such as lending out BTC or participating in some quantitative trading to maintain cash flow. It is very likely that MSTR may become a BTC-based bank in the future.

This post is sponsored by @ApeXProtocolCN | Dex With ApeX

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