The price of Strategy's perpetual preferred security, STRC, has dropped to a low of $97.11, closing at $98.57. This decline raises concerns about the company's ability to effectively raise capital through at-the-market (ATM) issuance.
STRC Struggles to Maintain $100 Target Amid Financial Pressures
Strategy's cash reserves have significantly decreased to about $871 million following a $1.5 billion repurchase of convertible debt, which is insufficient to cover its annual preferred dividend obligations of approximately $1.7 billion for more than half a year.
- The security has faced selling pressure correlating with declines in bitcoin prices, especially when bitcoin dipped into the $73,000 range.
- This selling trend is often exacerbated shortly after the ex-dividend date, when the security's price adjusts for the dividend's value.
- To ensure effective capital raising, Strategy seeks to keep STRC trading near its $100 par value.
Michael Saylor, Executive Chairman, discussed various potential funding sources in a recent interview, such as selling bitcoin, issuing MSTR equity when stock value exceeds a 1.22x net asset value, or utilizing STRC issuance. Saylor emphasized that these decisions aim to enhance shareholder value.
