Strategy's (MSTR) preferred stock STRC closed Tuesday at $91.79, an 8% discount to its $100 par value and just above its $90 issue price from July 2025. This marks the third-lowest close since listing.
STRC, which Michael Saylor calls a core component of the "Bitcoin flywheel," is designed to trade near par. However, it has been under sustained pressure in recent weeks due to three factors.
Bitcoin Pullback Erodes Asset Support
STRC is closely correlated with Bitcoin's price. BTC is currently consolidating around $65,000, roughly 50% below its October 2024 all-time high. Strategy holds over 850,000 BTC, so any drop in Bitcoin directly weakens the preferred stock's asset backing. Historically, STRC would rise near par before ex-dividend dates, dip by roughly the dividend amount, then gradually recover. But after the June 15 ex-dividend date, STRC failed to recover and stayed below $92.
Dividend Coverage Shrinks from 24 Months to 7
Strategy recently used part of its cash reserves to repay $1.5 billion in convertible debt, slashing the dividend coverage period from 24 months to roughly 7 months. Saylor previously signaled that as long as BTC's annualized return exceeds 2.05%, dividends could be paid indefinitely. The market now questions whether a 7-month buffer is enough to sustain the bi-weekly payouts.
Competitor SATA Offers Higher Yield, Zero Debt, Daily Dividends
Another source of pressure is Strive's (ASST) preferred stock SATA, issued by a fellow Bitcoin treasury company. SATA trades at $99.99, nearly at par, with an annual yield of around 13%, above STRC's 11.5%. SATA boasts daily dividends (vs. STRC's bi-weekly), zero debt (Strive has no outstanding borrowings), and par trading. The spread between the two securities has widened to $8.20, a record high.
At current prices, STRC offers an annualized yield of about 12.53%. To push the stock back toward its $100 par value, the market implies that STRC would need to raise its dividend rate by roughly 100 basis points (to ~12.5% of par) to attract buyers.
For income-seeking investors, STRC's 12%+ yield remains compelling even after taxes. But the discount serves as a reminder: preferred stocks are not bank deposits, and Bitcoin's volatility is the ultimate determinant of total return.