Strive’s SATS: How 15% Yield Becomes A Bitcoin Accretion Machine

SATS Preferred Stock

Strive's recently launched SATS perpetual preferred stock is designed with a fixed annual dividend of $15 per share, based on a $100 stated amount, translating to a 15% yield. This instrument is junior to Strive’s SATA preferred stock but distinguishes itself through its cumulative dividend feature, meaning any deferred payments accumulate as an obligation to shareholders. This structure aims to provide investors with predictable long-term income, a characteristic that could drive its market price above its par value.

15% Fixed Dividend

The fixed $15 annual dividend is a key differentiator for SATS, especially when compared to Strive's SATA, which has a variable dividend rate. The article suggests that this fixed, cumulative dividend could make SATS more appealing to income-focused investors, potentially leading them to bid its effective yield below that of comparable instruments like Strategy’s STRD. For instance, if SATS were to trade at a 13% effective yield, its market price would reach $115.38, creating a premium over its stated amount.

Net Bitcoin Per Share

Should SATS trade above $100, Strive gains a unique financing opportunity to increase its Net Bitcoin Per Share (Net BPS). If Strive issues new SATS shares at, for example, $115, it raises $115 million in gross proceeds for every 1 million shares. However, under the Net BPS methodology, which deducts preferred stock at its $100 notional amount, these new shares only create $100 million in additional preferred claims. The remaining $15 million directly contributes to the net Bitcoin attributable to common shareholders, effectively allowing Strive to acquire more Bitcoin without issuing additional common shares. While a floating liquidation preference exists, the article argues its relevance is limited to bankruptcy scenarios, where the preference would likely revert to $100.