Strive's SATS Pays a Fixed 15%, But Needs a $115 Price to Actually Work
Strive's new SATS preferred stock carries a $15 fixed, cumulative annual dividend on a $100 stated amount. The whole trade hinges on whether income investors bid it above par, because every dollar above $100 becomes free bitcoin per common share. At $90, the math flips and the issuance turns dilutive.
Strive's SATS preferred is now trading, and it carries a 15% fixed annual dividend on a $100 stated amount. That's $15 a share, every year, and the payments are cumulative. Sit junior to the company's SATA preferred, which pays roughly $13 annualized on a variable rate. Fine. But the coupon isn't the story. The story is whether the market prices SATS above $100.
Here's why that matters. If income buyers accept a 13% effective yield, SATS clears $115.38. At that level, Strive sells 1 million shares, raises $115 million, and books only $100 million of preferred notional. The extra $15 million drops straight into net bitcoin per common share. Effective cost of capital lands at 13.04%, not 15%. At par it's a 15% cost. At $90 it's 16.67%, and the whole structure inverts, because issuing below par is dilutive under the same math.
Two things complicate the picture. SATS has a floating liquidation preference that tracks recent closes, with a 10 day lookback and a $100 floor. Trade at $100 for ten sessions and the preference resets back down. Also, Strive intends to hold an 18 month dividend reserve of $22.50 per share. At par, that ties up roughly 22.5% of every dollar raised in cash equivalents instead of bitcoin. Real drag.
The comparison that matters is Strategy's STRD, trading near $71 as of Oct. 21. That's a 29% discount to its $100 stated amount, on a fixed $10 coupon with non-cumulative dividends, for a 14% effective yield. STRD sits on 4.7x bitcoin coverage. SATS has thinner backing. So this is a straight bet that income investors value a contractual, cumulative $15 more than they value collateral.
My read: Strive clearly priced the coupon high on purpose, to push the shares above par and unlock the accretion. It's financial engineering, but with an actual balance sheet behind it, which is more than most crypto-treasury products can claim. Watch the market price against $100. If the premium holds, the ATM works. If it doesn't, Strive is borrowing at mid-teens to buy bitcoin, and that's a hard trade to defend.
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Key Terms Explained
The first cryptocurrency, created in 2009 by the pseudonymous Satoshi Nakamoto.
Assets you put up as security when borrowing.
A portion of a company's profits distributed to shareholders.
When a borrower's collateral is forcibly sold because their position became too risky.