Strive (ASST) stock experienced a robust surge of approximately 5% on Tuesday, climbing to $26.92, following the successful closure of its upsized preferred stock IPO. The stock reached an intraday high of nearly $27.27, having previously closed at $25.54 on Monday.
The company successfully sold 7 million shares of its Series A Perpetual SATS preferred stock at $90 each, generating a substantial gross revenue of $630 million. Initially, Strive intended to sell 5 million shares but expanded the offering to capitalize on investor interest.
On October 20, SATS shares began trading on Nasdaq. Unlike the common ASST shares, SATS offers a fixed dividend tied to its stated value, appealing to income-focused investors.
After accounting for underwriting discounts, commissions, and expenses, net proceeds from the IPO are estimated to be around $608.15 million, according to data from BitcoinTreasuries.net. However, Strive has yet to disclose the portion of these proceeds that will be allocated for Bitcoin acquisitions. An SEC filing outlines various potential uses for the funds, including Bitcoin purchases, working capital, income-generating assets, capital expenditures, share repurchases, and possible acquisitions.
Understanding the SATS Dividend Structure
The SATS preferred stock pays a 15% annual dividend based on its $100 stated amount, translating to $15 per share annually if fully paid. Given the IPO price of $90, investors can expect a yield of 16.67%. These dividends are cumulative and will be payable at the discretion of the board, with payments set to commence on November 9, retroactively including accruals from the IPO closing date.
Strive also has an earlier preferred security, SATA, which holds precedence over SATS regarding dividends and liquidation claims. Both SATS and SATA rank above the common ASST stock in this hierarchy.
According to Chief Risk Officer Jeff Walton, Strive operates without debt and has no immediate maturities, allowing the company to concentrate solely on its obligation to distribute dividends. CEO Matt Cole described the IPO as a crucial milestone, reinforcing the company’s commitment to maximizing long-term total returns for its common equity investors.
Implications for Strive’s Bitcoin Holdings
The figures surrounding Strive’s IPO offer insights into its potential Bitcoin acquisition capabilities. Assuming a hypothetical Bitcoin price of $82,500, the net proceeds could enable the purchase of approximately 7,372 BTC before any additional fees. Currently, Strive holds 36,818 BTC in its treasury.
If the entirety of the net proceeds were directed towards Bitcoin acquisitions, Strive’s holdings could rise to about 44,190 BTC, surpassing Metaplanet’s reported 44,000 BTC. However, it is essential to note that Strive has made no formal commitment to this allocation.
In recent transactions, Strive added 1,223 BTC for around $100 million and acquired 4,045 BTC between October 12 and 16, both preceding the SATS settlement.
Other Bitcoin treasury firms are also exploring similar strategies, with Strategy proposing daily dividends on its STRC preferred stock, pending shareholder approval on October 28.
