Benchmark-StoneX has initiated a “Buy” rating on Strive, a Bitcoin-buying asset manager, highlighting its distinctive debt-free approach and the innovative use of preferred stock. Strive has recently expanded its cryptocurrency holdings to 19,000 BTC, equivalent to approximately $1.3 billion, and unveiled plans to boost its issuance program by an additional $4.2 billion.
In a recent SEC filing, Strive reported the acquisition of 2,500 Bitcoin in the past week, which contributed to the increase in its total holdings. Additionally, the company raised $44 million to ensure the payment of dividends on its preferred stock. Strive’s new product, named SATA, is designed to offer a 13% annual dividend through daily payouts, set to commence on June 16. This initiative makes Strive the first publicly listed security in the United States to provide frequent daily dividends, as opposed to the more common quarterly or monthly schedules.
Despite both Strive and another firm, Strategy, vying for the same investor demographic, analyst Mark Palmer characterized their relationship as one of friendly competition. He expressed that the businesses ultimately complement each other in advancing the emerging concept of “digital credit.” His comments emphasized that the growth of this asset class benefits all parties engaged in it, rather than resulting in a zero-sum scenario.
Strive’s recent acquisition of Bitcoin has been significant, with an investment of approximately $185.2 million at an average cost of around $74,092 per Bitcoin. The firm has reported a quarterly yield of 23% and a year-to-date yield of 36.7%. Analysts noted that Strive’s cash reserves have been bolstered to support an 18-month dividend reserve, enhancing its position in the market.
On the stock performance front, Benchmark-StoneX has set a price target of $32 for Strive. However, the firm’s shares experienced a drop of 6.6% to $16.06, amidst market reactions tied to Strategy conducting its first Bitcoin sale since 2022. In light of this, Strive plans to increase its equity issuance program, allowing the company to issue an additional $2.1 billion each in common equity and SATA.
Strive’s bitcoin stockpile, though only 2.2% of that held by Strategy, distinguishes it from other Bitcoin treasury companies that often rely on convertible debt or margin financing. Analysts pointed out that Strive’s framework effectively mitigates risks associated with Bitcoin price volatility that could jeopardize shareholder value through forced sell-offs.
SATA is designed to maintain a trading price close to its $100 par value, with surplus trading enabling further issuance and capital to support Bitcoin purchases. Palmer emphasized Strive’s agility, noting its ability to adapt SATA’s dividend structure swiftly, unlike Strategy, which has sought shareholder approval for its distributions.
In contrast, Strategy has seen its cash reserves diminished by 61% following its recent debt repurchase, which underscores the differing strategies between the two firms. While Benchmark-StoneX reiterated a “Buy” rating for Strategy, suggesting a price target of $570, the analysts clarified that Strategy’s recent Bitcoin sale should not be misconstrued as a departure from its core philosophy. They believe this move reflects the company’s flexibility to manage its obligations without sacrificing its Bitcoin assets.
The unfolding dynamics between Strive and Strategy illustrate the evolving landscape of digital assets, with both firms pushing forward the concept of digital credit while navigating market challenges.
