Proposed STRC upgrade seen as shared upside lever for Strategy and Strive shareholders: TD Cowen

TD Cowen analysts say proposed dividend changes to Strategy's STRC preferred shares could benefit its common stockholders as well as holders of bitcoin treasury peer Strive.

In back-to-back notes on Monday and Tuesday, TD Cowen analysts Lance Vitanza and Jonnathan Navarrete framed STRC as a "more stable price option, with secondary benefits including improved liquidity and increased investor interest," while also acting as a funding funnel for further bitcoin (BTC) accumulation.

Strategy recently proposed moving STRC's monthly dividend payment to semi-monthly, saying it could "lead to reduced reinvestment lag, enhanced liquidity, market efficiency, and increased price stability."

"From the perspective of common shareholders, Strategy is effectively creating the only self-funded perpetual preferred instrument in the public markets," the analysts wrote, adding that it "frees up capital" for continued bitcoin accumulation without relying too much on traditional financing.

Voting on the STRC proposal will continue through June 8 and, if approved, would begin semi-monthly payments on July 15.

The bank cut its price target for Strategy's common stock (MSTR) to $350 earlier this month, but revised this to $385 on Monday. MSTR is trading for roughly $168, down more than 44% in the past six months.

Upside for Strive

A separate note published Tuesday extends that bull thesis to Strive, which TD Cowen said is "both a direct and indirect beneficiary" of Strategy’s push to scale STRC.

"With higher BTC inflows … we believe Strive’s NAV premium could increase, while the enhanced capital flexibility … could allow for higher BTC yields," TD Cowen wrote in the note to clients.

Strive has also been leaning into the same playbook. Its SATA preferred stock, modeled on STRC, offers a 12.75% dividend and has been used to purchase bitcoin and $50 million of Strategy's STRC.

The note also points to a feedback loop in which STRC issuance supports more bitcoin buying, and firms with similar treasury models could benefit from stronger investor interest and improved capital access.

TD Cowen initiated coverage of Strive (NASDAQ: ASST) earlier this month with a "buy" rating and a $26 price target, and reiterated that target on Tuesday. ASST is trading for $15.70 today, up more than 50% in the last 30 days.