MicroStrategy’s STRC falls below $95 amid Bitcoin slide

MicroStrategy’s Variable Rate Series A Perpetual Stretch Preferred Stock, STRC, closed at $94.65 on June 3, trading below $95 and under its $100 par value for the first time in about three months.

Bitcoin fell to roughly $62,000 over a 24-hour period, triggering more than $1.66 billion in liquidations across derivatives platforms, predominantly affecting long positions.

STRC is structured with a $100 par value and targets a variable annual yield near 11.5%. The preferred uses dividend adjustments intended to influence its market price: the company can raise the dividend rate when the market price falls and issue new shares to raise capital when the price trades above par.

With STRC trading below $95, issuing new preferred stock becomes less attractive because the company would need to offer higher yields to attract buyers, which increases cash outflows for dividends.

MicroStrategy disclosed a modest sale of bitcoin to help fund preferred dividends, its first sale since 2022. The company reports holding more than 843,706 BTC and maintaining substantial cash balances.

The preferred’s price decline has coincided with selling pressure in MicroStrategy’s common shares and reduced one of the firm’s capital-raising channels that previously allowed issuance above par and funding of additional bitcoin purchases.

Trader Scott Melker wrote, “STRC’s $100 par value is not a price floor,” adding that a discount can reflect investor demand for higher yield. Jeff Walton wrote that the at-the-market issuance converts demand above $100 into capital to buy bitcoin and can cap upside volatility. Economist Peter Schiff posted that STRC’s yield moved toward about 12.12% as the market price fell and warned that lower prices would require higher dividend rates.

Shareholders are being asked to vote by June 7 on an amendment to change dividend payments from monthly to semi-monthly while keeping the 11.5% annualized rate. MicroStrategy said the change aims to reduce reinvestment lag and tighten price action around par.

At the trading price below $95, the effective yield on STRC approaches 12%. Current holders face mark-to-market losses and uncertainty about dividend sustainability if bitcoin prices remain weak.