Strategy Europe's financing cools down: Why did the $715 million product become a niche item

Strategy launched its first non-US perpetual preferred stock, STRE, in Europe in November last year, issuing at an 80 euro discount (par value 100 euros), successfully raising approximately $715 million. However, more than two months after listing, market response has been surprisingly tepid. This stands in stark contrast to the company’s success in the US market and has also raised questions about Strategy’s European strategic prospects.

Why the European Product Is Struggling

The specific difficulties of STRE

STRE appears to have good conditions: an annualized dividend yield of 10% is attractive in the current environmentally conscious market. But its actual performance post-listing has been disappointing. According to the latest news, the main reasons for STRE’s lukewarm reception include:

• Limited listing channels: chosen to list on Luxembourg Euro MTF, with significantly insufficient trading depth and liquidity
• Trading difficulties: mainstream brokers and retail trading platforms struggle to support STRE trading, directly limiting retail investor participation
• Lack of transparency: absence of transparent pricing mechanisms and sufficient market data disclosure, making it hard for investors to assess true value

These issues seem technical but actually reflect Strategy’s underestimation of the European market infrastructure.

A stark contrast with the US market

In comparison, Strategy’s other product in the US market, STRC (Stretch Preferred Stock), has performed quite successfully. According to the latest information, STRC’s scale has exceeded $3 billion, offering an 11% tax-deferred dividend, and has gained broad recognition among US investors.

This difference is not a product design issue but stems from market environment and liquidity disparities:

Deep Thinking

Why is the European market so difficult?

This is not just a problem for Strategy. Europe’s financial markets are relatively fragmented, with significant regulatory differences across countries, and retail investors’ acceptance of new financial products is less than in the US. Additionally, European investors’ demand for high-yield products may not be as urgent as in the US.

Strategy’s choice to list in Luxembourg was to gain regulatory convenience in Europe, but this decision has instead limited the product’s accessibility. It is a typical trade-off failure between “regulatory friendliness” and “market friendliness.”

The future strategic suspense

According to the latest news, Strategy has not yet announced plans for STRE’s follow-up. The market’s current focus is: will Strategy continue to deepen its European market presence, or shift to maintaining its US market layout?

From the CEO’s recent statements, Strategy clearly has more confidence in the US market. The CEO emphasized the growth potential of STRC and stated that the company’s ample Bitcoin reserves and US dollar reserves are sufficient to sustain these dividends for 60 to 100 years. This optimistic attitude is mainly based on success in the US market.

Summary

The failure of STRE is not due to the product itself being poor but because Strategy underestimated the complexity of the European market. The $715 million fundraising seems substantial, but with limited liquidity, this product is becoming a “cold market” item.

For Strategy, the real challenge is: how to find the right entry point in the European market? Should they continue to adjust STRE’s trading mechanism or shift to other strategies? This decision will directly impact Strategy’s diversified global layout. From current signs, the company appears more inclined to consolidate its existing US market advantage, but lessons from the European market also remind investors that global expansion is not as simple as it seems.