Strive's newly IPO'd SATS perpetual preferred stock introduces a potential financing mechanism: the company could issue preferred equity above its $100 stated amount and grow Net Bitcoin Per Share (Net BPS) in each issuance round, depending on market pricing and other factors.
The strategy hinges on whether SATS trades above par value. Its unusually high 15% fixed annual dividend—$15 per share—makes that outcome plausible.
Why SATS Could Trade Above Par
SATS carries distinctive features compared to Strive's other preferred instruments. Its $15 annual dividend is fixed, unlike Strive's SATA preferred stock, which uses a variable dividend rate currently at $13 per share. SATS dividends are cumulative, meaning unpaid dividends accumulate as obligations to shareholders rather than being forgiven.
These characteristics could appeal to income-focused investors seeking predictable long-term returns. For comparison, Strategy's STRD preferred stock currently trades around $71 per share—29% below its $100 stated amount—despite offering a fixed $10 annual dividend that translates to a 14% effective yield. STRD dividends are non-cumulative.
If investors value SATS at a 13% effective yield, its market price could reach approximately $115.38.
The Net Bitcoin Per Share Mechanism
If SATS trades at $115 and Strive issues one million shares through an at-the-market offering, the company would raise $115 million while creating only $100 million in additional preferred stock claims under Net BPS methodology. The remaining $15 million flows into net Bitcoin attributable to common shareholders.
Under this scenario, Strive raises $115 of capital for every $100 of preferred notional created, financing the purchase at an effective cost of 13.04% annually.
One consideration: SATS has a floating liquidation preference that adjusts based on recent market prices. If SATS trades at $115, its liquidation preference can rise toward that level, temporarily increasing the economic claim held by preferred shareholders. However, the preference can reset downward if SATS trades at $100 for 10 consecutive trading days, returning to $100. The liquidation preference becomes relevant only in liquidation scenarios, which would likely occur only if the company faces bankruptcy—circumstances under which preferred stock would almost certainly trade below par, returning the preference to $100.
Capital Costs and Constraints
The strategy's viability depends on market pricing discipline. At $115, Strive effectively raises capital at a 13% annual cost. At par ($100), the cost rises to 15%. Below par, the cost climbs higher and issuance becomes dilutive.
Strive intends to maintain an 18-month dividend reserve of $22.50 per SATS share. This requirement means 22.5% of raised capital must sit in cash equivalents while only 77.5% can deploy into Bitcoin, effectively increasing the true cost of capital beyond the dividend yield.
The Central Question
SATS may become both one of the most expensive digital credit instruments on a stated dividend basis and one of the more attractive financing tools for Net BPS accretion, depending on how the market prices the fixed, cumulative $15 annual dividend relative to the $100 stated amount.
The opportunity exists in the spread between par value and the price investors are willing to pay for the dividend stream. If SATS maintains a premium, this spread could generate accretion for common shareholders. If the stock struggles to trade above par, the mechanism would not apply.
