Key facts
- Strategy's Stretch preferred stock (STRC) closed at $89 on Wednesday, 11% below its par value.
- The stock reached a 52-week low of $88.50 during trading.
- STRC is a bitcoin-backed equity issued by Strategy to raise funds for bitcoin acquisitions.
- The stock currently pays a 12.9% effective rate as a cash dividend.
- Strategy paused its program to issue new shares to buy bitcoin due to STRC trading below par.
Strategy's Variable Rate Series A Perpetual Stretch Preferred Stock (STRC), designed to maintain a stable price around $100 while paying a high dividend, closed Wednesday at $89, its lowest non-adjusted daily close on record. The stock's decline below par is attributed by some market watchers to periods of bitcoin volatility, with Bitcoin trading around $65,000 leading up to the Federal Open Market Committee meeting where the Fed voted to keep interest rates steady.
STRC, a bitcoin-backed equity issued by Strategy, currently pays a 12.9% effective rate in cash dividends semi-monthly. The company has paused its program to issue new shares to buy bitcoin while STRC trades at a discount. In late May, Strategy sold 32 BTC for approximately $2.5 million to fund distributions on STRC, the first time it has liquidated BTC since 2022.
Analysts have rebutted fears of a "death spiral" for Strategy stemming from these sales and general market weakness. SATA, a preferred stock created by Strive to mirror STRC, was trading above $99 on Wednesday, offering a 13.69% rate. Stretch is senior to Strategy's other preferred stocks (STRD, STRK) and common stock (MSTR), but junior to "Strife" (STRF) and debt.