Strategy (MSTR) introduced its first non-U.S. perennial favorite, Stream (STRE), in November with the aim of tapping into demand across the European Economic Area (EEA).
However, it did not go as Michael Saylor’s company intended.
The preferred stock was issued with a stated value of EUR100 ($115) per share. share, pays a 10% annual dividend and is above ordinary equity in the capital structure. STRE was positioned as a European analogue to Stretch (STRC), the company’s high yield money market preferred stock. The strategy ultimately raised $715 million, pricing the instrument at a 20% discount to EUR80 per share due to market conditions and demand.
Although the financial product sounded good in theory, STRE has struggled to gain traction since its issuance. There has also been little public communication from the company about the product, and it has since been removed from the company’s dashboard.
So what happened?
Khing Oei, founder and CEO of Treasury, a bitcoin tax company based in the Netherlands, has pointed to several structural reasons why STRE may not have taken off, despite Europe being a sufficiently large addressable market.
Firstly, according to Oei, STRE is difficult to access. The product is listed on Luxembourg’s Euro MTF, a venue that lacks user-friendly distribution. Interactive Brokers, one of the largest global brokerage platforms, does not offer STRE, and many other retail-focused platforms do not support trading in the instrument either.
Then there is the lack of transparent historical pricing and reliable market data. Limited visibility across platforms such as TradingView hinders adoption as investors find it difficult to assess liquidity and performance. At present, TradingView shows a market cap of $39 billion for STRE along with trading volume of only 1.3k.
The future?
What will happen to STRE given the problems it faces?
Oei suggests that STRE should be relisted at alternative venues.
Dutch financial and trade infrastructure offers e.g. stronger distribution, deeper market making, tighter bid-ask spreads and wider retail availability. These conditions are likely to be more conducive to scaling the adoption of the financial product.
While chairman Michael Saylor has previously played down expansion into markets such as Japan, it remains an open question whether Strategy will double down on Europe as a growth opportunity, or instead continue to focus primarily on the US market, where it has four perennial favorite equity products.
