STRC hits record low below $74 as effective yield jumps above 14%
The preferred stock briefly fell to $73.65, lifting its effective yield above 14% at the low and weakening a key source of funding for Strategy’s Bitcoin purchases.
Strategy’s Stretch preferred stock plunged to its lowest price on record Thursday as the accelerating Bitcoin selloff placed fresh pressure on the company’s capital structure.
STRC dropped to an intraday low of $73.65 before recovering to around $79. The preferred stock fell nearly 9% at its lowest point Thursday and traded more than 25% below its $100 par value.
Bitcoin briefly fell to $58,189, its lowest level of the year, before recovering toward $59,600. Strategy’s common stock also dropped below $90, touching $86.72 and reaching its lowest level since early 2024.
STRC currently pays an annual dividend rate of 11.5% based on its $100 stated amount. At a market price of $79, that translates into an effective yield of roughly 14.6%. At Thursday’s low of $73.65, the effective yield briefly exceeded 15.6%.
Strategy has not yet increased the official dividend rate. The higher effective yield is produced by the decline in STRC’s market price.
Strategy evaluates the dividend rate each month using STRC’s monthly volume weighted average price. Under its current framework, a monthly average below $95 leads management to recommend an increase of at least 50 basis points, subject to board approval.
That framework suggests STRC’s dividend rate could rise to at least 12% for the next period if the June average remains below $95. With about $10.49 billion of STRC outstanding, a 50 basis point increase would add roughly $52 million to Strategy’s annual dividend obligation. STRC already costs the company approximately $1.21 billion annually at the current rate.
Strategy faces pressure but no immediate Bitcoin sale
The added cost raises the possibility that Strategy could eventually sell more Bitcoin, either to meet its dividend obligations or repurchase STRC shares to support the price closer to par.
However, that outcome does not appear imminent. Strategy held a $1.4 billion reserve as of June 21 and recently raised $335.5 million through common stock sales. It can still use cash, issue additional shares, raise STRC’s dividend rate or slow Bitcoin purchases before selling more Bitcoin.
STRC is also perpetual and does not require Strategy to repurchase shares at $100. For now, the pressure appears manageable, although further declines in STRC, MSTR and Bitcoin could increase the likelihood of another Bitcoin sale.