Strive’s SATA program reportedly generated about 55 million dollars this week, enough to buy nearly 638 bitcoins. But this financing capacity depends directly on the preferred stock price. Fr
Strive’s SATA program reportedly generated about 55 million dollars this week, enough to buy nearly 638 bitcoins. But this financing capacity depends directly on the preferred stock price. From Wednesday, the stock fell below 100 dollars, preventing the company from continuing its issuances. A limit that recalls the risks of the Strategy-inspired model.
The mechanism relies on a simple logic. Strive, which held 27,462 bitcoins at the end of September, gradually sells SATA preferred shares as part of an “at-the-market” (ATM) program. The company then uses the funds raised to strengthen its bitcoin reserve.
However, this device imposes a condition: the stock must remain above its nominal value of 100 dollars. Yet, this week, SATA only exceeded this threshold on Monday and Tuesday. From Wednesday onward, the price dropped below, thus cutting the main source of financing for purchases.
According to trackers, Strive still raised about 55 million dollars over the week, enough to acquire nearly 638 bitcoins. This estimate is based on trades executed above par and on a ratio calculated from previous company statements. With bitcoin around 82,800 dollars Friday, this amount matches the announced magnitude.
Michael Saylor popularized this strategy at Strategy thanks to STRC, its perpetual preferred variable rate share. Strive adopts the same principle with SATA, but on a smaller scale.
In its October 5 filing with the SEC, Strive indicates having issued 1,304,902 additional preferred shares between September 25 and October 2. Their nominal value thus exceeds 130 million dollars.
Over the same period, Strategy sold no STRC shares and financed the purchase of 334 bitcoins with common shares, bringing its reserve to 848,000 units. However, Saylor sees Strive as an ally rather than a rival.
This strategy nevertheless has a cost. Each SATA issuance brings immediate funds but also increases the dividends that Strive will have to pay in the future. As of September 30, the company estimated its annualized obligations at 168.2 million dollars, for 1.294 billion dollars of shares issued at par.
Moreover, its portfolio remains exposed to bitcoin fluctuations. As of September 30, Strive held 28,000 BTC purchased at an average price of 90,170 dollars, while their market value reached about 2.34 billion dollars. Bitcoin was then trading below this acquisition cost. The 2,000 bitcoins bought the following week were acquired at about 84,422 dollars each.
The next official filing will be awaited to know the exact balance of the week. Meanwhile, the 638 bitcoins remain an estimate. One thing is certain: Strive’s model works as long as investors accept to buy SATA above its nominal value.
