Strategy's STRC Preferred Stock Falls to Record Low

Strategy's preferred stock slump halts funding for bitcoin acquisitions

Strategy's Variable Rate Series A Perpetual Stretch Preferred Stock, known as STRC, has plummeted to a historic low of $89, significantly affecting the company's ability to finance bitcoin purchases. This decline, approximately 11% below its par value of $100, has prompted Strategy to suspend its at-the-market share issuance program, which is crucial for raising capital.

The downturn in STRC coincides with the company's recent bitcoin sale, which was executed to cover preferred dividends. On June 1, Strategy disclosed that it had sold 32 bitcoins for around $2.5 million, marking its first sale since it began accumulating bitcoin in 2022. This decision surprised many investors, particularly given Chairman Michael Saylor's previous stance against selling bitcoin.

Despite the challenges posed by the STRC drop, Strategy has established a U.S. dollar reserve of $1.1 billion to meet its preferred dividends and debt obligations while still acquiring bitcoin through other means. Currently, the company holds approximately 846,842 bitcoins, making it the largest corporate holder of the cryptocurrency, representing about 4% of the total supply.

Although STRC has previously seen dips below par, these instances typically align with periods of bitcoin price volatility. Bitcoin has remained stable between $64,000 and $65,000 this week, while Strategy's common stock, MSTR, fell roughly 5% to $116.52 on Wednesday.