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How will $STRK change into $MSTR?
104 sats \ 12 comments \ @bitcoingecko 12 Jul bitcoin
I know 10 shares of STRK can become 1 share of MSTR once MSTR is 1000 dollars a share. But what is the process? Will I have to do something manually? Or will it be an automatic conversion? Also, what about taxes? Will it make taxes overly complicated? I understand buying and selling stock, but would rather not make it very complicated.
It seems STRK is a good idea, but these things worry me a bit.
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11 sats \ 1 reply \ @freetx 12 Jul
I really don't know, but logically I think you will have to manually initiate it somehow. The theory of convertibles are like options - they are a "right" not an "obligation".
Therefore I imagine it will physically function like options currently do within your brokers platform. For options, brokers usually include an "Exercise" button next to the option once its "in the money".
When the option is not "in the money" the exercise button is usually greyed out or not present....
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9 sats \ 0 replies \ @Bell_curve 13 Jul
Option not obligation to convert
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0 sats \ 1 reply \ @denlillaapan 12 Jul
Taxes are a good question. Otherwise this happens either by company enforcing it (and so company, via custodian, just makes it happen), or by your own choice — so you have to push a button or fill out a form, usually again via custodian.
My best guess
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3 sats \ 0 replies \ @bitcoingecko OP 12 Jul
Taxes are my main concern unfortunately. 🫠🫠🫠
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0 sats \ 2 replies \ @DarthCoin 12 Jul
all bullshit. Why people are wasting their time with this crap? IT'S ALL A PONZI SCHEME
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48 sats \ 1 reply \ @denlillaapan 12 Jul
Darth is back, bringing the wisdom
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0 sats \ 0 replies \ @Bell_curve 13 Jul
by wisdom you mean repetitive and predictable talking points?
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0 sats \ 0 replies \ @Bell_curve 13 Jul
Great questions — you're asking exactly the right things before getting into a convertible preferred like STRK (MicroStrategy’s 8.00% Series A Preferred). Let’s break it down in plain English:

🔁 1. Is the Conversion to MSTR Automatic at $1,000?

No. The conversion is not automatic when MSTR hits $1,000 per share.
  • The $1,000 price point is just the point where converting 1 STRK (worth $100 in liquidation preference) into 0.1 shares of MSTR becomes mathematically break-even.
  • But you must manually initiate the conversion, and even then:
    • You can only convert during specific periods (typically the last month of each calendar quarter, like March, June, September, or December).
    • You must convert in amounts sufficient to receive at least 1 whole share of MSTR (i.e., 10 STRK minimum unless converting your entire position).

🛠️ 2. What Is the Actual Process to Convert STRK?

  1. Monitor MSTR price – when it’s near or over $1,000, conversion might make sense.
  2. Wait for a valid conversion window (usually the last month of the quarter).
  3. Contact your broker (Schwab, Fidelity, etc.) — they’ll either:
    • Give you a form to sign, or
    • Route it through their corporate actions desk.
  4. You’ll receive MSTR shares in your account within 1–2 business days (plus cash for any fractional shares).

💰 3. Will This Trigger Taxes?

Here’s where it gets a bit nuanced.
  • If you’re converting STRK into MSTR, it may or may not be a taxable event depending on IRS treatment.
  • Usually, a conversion like this is considered a "non-taxable exchange" (like swapping one form of equity for another under IRC §368).
  • If it's non-taxable:
    • Your cost basis in STRK becomes your basis in MSTR.
    • Your holding period carries over.
  • But if the IRS deems it taxable (unlikely for voluntary conversions unless accompanied by other gains/losses), you’d recognize a capital gain or loss at time of conversion.
👉 Best move: Check with a CPA, especially if you’re converting a large amount.

🧭 4. Summary — What You Should Know

QuestionAnswer
Is it automatic at $1,000?❌ No, you must convert manually during allowed periods
Can I convert anytime?❌ No, only during specific windows (e.g., last month of each quarter)
Minimum to convert?✅ Yes — at least enough for 1 MSTR share (10 STRK) unless converting all
Taxes triggered on conversion?🤷 Probably not, but check with your tax advisor to be sure
Is STRK a complicated investment?☑️ Slightly more complex than plain MSTR, but manageable with help

✅ Should You Still Buy STRK?

It depends on your comfort level:
  • STRK is great for income (8% yield) and has upside if MSTR rallies.
  • But it's not for “set it and forget it” investors. You need to:
    • Track MSTR price,
    • Understand the conversion process,
    • Possibly talk to your broker and accountant.
If you're okay with a little complexity and want high yield + upside, STRK can be smart. Otherwise, just buying MSTR directly may be simpler.
generated by ChatGPT
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0 sats \ 3 replies \ @Bell_curve 13 Jul
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0 sats \ 0 replies \ @Bell_curve 13 Jul
Correct — it's definitely not automatic at any price threshold. Here's the precise breakdown from the prospectus:

🚫 When STRK Conversion Is & Isn’t Automatic

You cannot convert any time MSTR hits $1,000. 🛑 From the SEC prospectus:
That means there's no continuous automatic conversion as soon as MSTR’s share price hits $1,000. You must take action during one of these specific periods, not simply when the price threshold is crossed.

✅ TL;DR

ClaimStatus
Automatically convert at $1,000?❌ No
Convert anytime MSTR hits $1,000?❌ No
Must wait for quarter-end window or special event?✅ Yes
Even tax/fundamental events have time-limited conversion?✅ Yes

What You Should Do If MSTR Hits $1,000

If MSTR trades around or above $1,000 during the last month of a quarter (e.g., September 1–30, December 1–31, etc.):
  1. Initiate conversion with your broker during that window.
  2. Outside that window (even if MSTR > $1,000), conversion isn’t allowed unless there's a corporate event.
  3. If a redemption or fundamental change occurs, that opens another conversion/repurchase window—but it's separate from the $1,000 logic.

In Summary

  • The $1,000 “trigger” is economic rationale, not a legal trigger.
  • Actual conversion rights are tied to timing events, not price.
  • Yes, you can convert when it’s financially sensible, but only during allowed windows.
Let me know if you'd like help finding the exact date ranges or setting reminders for the conversion window.
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0 sats \ 1 reply \ @Bell_curve 13 Jul
ChatGPT contradicted itself...
Here are the exact conversion trigger terms for STRK from the official prospectus:

🔁 Conversion Rights (Holder-Initiated)

🏛️ Issuer-Initiated Remediation (Redemption & Repurchase)

  • Optional Redemption by Company:
    • MSTR can redeem all STRK if the total liquidation preference of STRK falls below 25% of the initial offering amount (Strategy).
  • Tax-Event Redemption:
    • Triggered if a specified tax event occurs. Redemption price is the higher of:
      1. $100 liquidation preference, or
      2. Average market price of STRK over 5 trading days prior, plus any accumulated unpaid dividends (Stock Titan, SEC, Strategy).
  • Fundamental-Change Repurchase Right:
    • If a fundamental change occurs (e.g., acquisition), you have the right to require MSTR to repurchase STRK at liquidation preference + dividends (Strategy).

✅ So… is it automatic at $1,000?

  • No, there's no automatic/triggered conversion at $1,000.
  • Instead, it's a voluntary right (you choose when to convert) with terms set such that if MSTR reaches $1,000, it's financially sensible to convert.

🧭 Summary Table

FeatureDetails
Conversion initiated byYou (holder), on any business day
Rate0.1 MSTR per STRK (initial)
Trigger to convertUp to you; favorable when MSTR ≈ $1,000
Fractional sharesCash settlement or rounded up
AdjustmentsFor stock events, rights, splits, dividends
Issuer redemptionPossible if < 25% outstanding, tax event, or fundamental change

🧠 What This Means for You:

  • If MSTR hits $1,000, you'll likely choose to convert—but it won’t happen automatically.
  • You must actively submit a conversion instruction during business hours.
  • This gives you control and flexibility, but means staying alert if you want to seize the conversion.
  • Meanwhile, the company can force redemption in specific cases (e.g., tax or corporate change), but not at the $1,000 mark alone.
Would you like help understanding how to execute a voluntary conversion via your brokerage platform? Or would you prefer a side-by-side look at STRK versus directly owning MSTR? Just say the word!
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0 sats \ 0 replies \ @Bell_curve 13 Jul
Perfectly summarized — and your instincts were right: the conversion is not automatic at $1,000/share for MSTR. You have to manually initiate it through your broker or custodian, and the $1,000 threshold is just a mathematically optimal point to consider converting based on the 0.1 ratio.
Here’s what this means in practice:

🛠️ What You Must Do to Convert STRK to MSTR

  1. Monitor MSTR’s price. Once it approaches or exceeds $1,000, it becomes attractive to convert.
  2. Contact your brokerage (e.g., Fidelity, Schwab, etc.) and ask:
    “How do I submit a voluntary conversion instruction for STRK Series A Preferred into MSTR common shares?”
  3. Confirm minimum conversion units. You typically must convert in multiples of 10 STRK to get whole shares of MSTR.
  4. Submit the request. This may involve a special form or instruction via the corporate actions desk.
  5. Receive MSTR + cash-in-lieu (if any). Delivery is T+2 (two business days), and you'll receive cash for any fractional remainder unless it's rounded up.

💸 Tax Considerations

  • Not taxable upon conversion if it's a non-taxable recapitalization under IRS Section 368 (consult a CPA to confirm).
  • If taxable, the difference between your STRK basis and MSTR market value could trigger capital gains.
  • If STRK was bought on the open market, your cost basis and holding period may transfer to the MSTR shares.
👉 To avoid surprises, consider asking your tax advisor:
“Will my STRK-to-MSTR voluntary conversion be considered a taxable event under IRS rules?”

🧠 Quick Mental Checklist

QuestionAnswer
Is conversion automatic at $1,000?❌ No, you must initiate it
Can I convert partial shares?✅ Yes, but you'll get cash for fractional MSTR
Can MSTR force conversion?❌ No, but they can redeem under other events
Does it affect taxes?🤷 Possibly — depends on your situation
Would you like me to walk you through what to say or write to your brokerage’s corporate actions team, just in case they give you the runaround?
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