Strategy’s STRC falls below its $100 target value as recent Bitcoin purchases raise investor concerns over yield pressure and capital structure.
Bitcoin News
Strategy's perpetual preferred stock, Stretch (STRC), declined 3.58% on June 16 to close at $91.79. The price sits 8.2% below its $100 target value, marking one of the stock's weakest levels since launch.
The drop followed two recent rounds of Bitcoin (BTC) buying. Strategy purchased 1,587 BTC for roughly $100 million, after buying 1,550 BTC for a similar amount the week before. The combined purchases brought the company's total holdings to 846,842 BTC.
Yield Pressure Builds on Stretch
Stretch is structured to pay a dividend of 11.5% at its $100 par value. Because the price has fallen below par, the effective yield investors now receive has climbed to 12.5%.
Markus Thielen, CEO of 10x Research, said that the market would prefer Strategy direct its cash toward dividend payments rather than additional BTC purchases. He said traders appear to view the recent buying pace as an unsustainable path for the preferred stock.
Nick Ruck, director of LVRG Research, pointed to broader market conditions as a separate factor. He said risk-off sentiment across crypto markets has reduced investor appetite for the stock, and that concerns over Strategy's expanding capital structure and at-the-market share issuance are testing its ability to hold near par value.
Related Article: Saylor Defends BTC Sale as Core to Strategy’s Digital Credit Business
MSTR Shares Also Decline
Strategy's common stock, MSTR, fell 6.35% on June 16 to close at $122.81. That price is down 67% over the past 12 months.
Stretch now faces direct competition from a comparable product. Strive's perpetual variable-rate preferred shares, under the ticker SATA, are trading at their full $100 par value and offering an effective yield near 13%, a stronger position than Stretch's current discounted price.
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