Key facts
- Strategy's preferred stock (STRC) fell to $91.79, below its $100 par value, amid investor concerns.
- Recent Bitcoin acquisitions are seen by traders as an unsustainable path for STRC's dividend payments.
- Strategy purchased 3,137 Bitcoin for approximately $200 million in the past two weeks.
- The company's common stock (MSTR) has fallen 67% over the last 12 months.
- STRC faces competition from similar products offering higher yields.
- Strategy sold 32 Bitcoin for $2.5 million, its first sale since 2022, to support dividend payments.
Strategy's perpetual preferred stock (STRC) fell near record lows, trading below its $100 par value, as investors expressed concern over the company's latest Bitcoin acquisitions and their impact on dividend coverage. Markus Thielen, CEO of 10x Research, noted that traders would prefer Strategy not acquire more Bitcoin and instead use cash for dividend payments, viewing the latest BTC acquisition as an unsustainable path for STRC.
STRC, designed to return an 11.5% dividend, was trading at an effective yield of 12.5% due to its price decline, suggesting the firm may need cash to support the yield rather than for further Bitcoin purchases. Strategy announced it acquired 1,587 Bitcoin for approximately $100 million last week, following a similar purchase of 1,550 BTC the week prior, bringing its total holdings to 846,842 Bitcoin.
Nick Ruck, director of LVRG Research, cited broader risk-off sentiment in crypto markets as weighing on investor appetite. He added that persistent selling pressure and concerns over Strategy's expanding capital structure and ATM issuance are testing the resilience of STRC's yield. The company's common stock (MSTR) also declined, falling 6.35% to $122.81, marking an 67% decrease over the past 12 months. STRC faces competition from Strive's SATA shares, which trade at $100 and offer an effective yield of about 13%.