Key facts
- Strategy's STRC preferred stock closed at $89, 11% below its $100 par value, reaching a record low.
- The company has paused its at-the-market program for issuing new shares to buy bitcoin due to the stock trading below par.
- Strategy recently sold 32 bitcoin for $2.5 million to fund preferred dividends, marking its first bitcoin sale since 2022.
- STRC pays a variable dividend, currently at an effective rate of 12.9%.
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.
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.