Key facts
- Strategy's STRC preferred stock is trading significantly below its $100 par value, hitting lows of $82.50 and closing at $88.59.
- Trading volume for STRC surged to approximately 10.7 million shares on Thursday, a record high.
- Arca CIO Jeff Dorman suggests Strategy may sell $3-4 billion in Bitcoin or MSTR stock to support STRC.
- Retail investors hold $8.8 billion in STRC stock, described as 'junk credit'.
- TD Cowen maintains a Buy rating on Strategy's common and preferred stocks.
Strategy's preferred stock, STRC, continued its sharp decline on Thursday, hitting an intraday low of $82.50 and closing at $88.59, significantly below its $100 par value. Trading volume surged to a record approximately 10.7 million shares, indicating heightened investor interest and concern. The stock has now traded below $90 for an extended period since its IPO.
Analysts at TD Cowen maintain a Buy rating on Strategy's common stock (SMSTR) and its preferred stocks, including STRC. However, the firm's interpretation of Strategy CFO Andrew Kang's statements suggests a near-term priority on rebuilding reserves and supporting preferred stock obligations over immediate Bitcoin purchases.
Concerns over Strategy's capital structure have led Arca CIO Jeff Dorman to suggest the company may need to sell between $3 billion and $4 billion in Bitcoin to support STRC. Dorman also noted a $1.7 billion annual cash outlay problem from preferred dividends and questioned Strategy's valuation, citing $35.2 billion in unencumbered Bitcoin collateral against a $40.4 billion equity market capitalization.
Financial commentator Peter Schiff has warned of potential lawsuits against Michael Saylor and Strategy due to the declining stock value and associated risks, with retail investors holding approximately $8.8 billion in STRC, which has been described as 'junk credit'.