TLDR Tech / Crypto
STRC Has No Reason to Trade at $100
Strategy's STRC preferred stock, trading at $75 against a $100 par value, lacks the structural mechanism a bond provides: without a maturity date, holders can recover par only through a buyback or bankruptcy. The bankruptcy floor is remote given Strategy's 11% net leverage ratio, which would require BTC to fall to around $6,600 before the leveraged position collapses, and even then, junior preferred holders stand to receive less than $100 per share given their subordinate claim. Dividend rate adjustments, the other proposed price-support mechanism, carry board discretion risk and worsen Strategy's financials if raised, while ATM issuance at current mNAV levels dilutes BTC per share and is unsustainable. At $75, STRC yields 15.3% against the original 11.5% coupon, and if the market prices in 20% as fair compensation for dividend uncertainty and bankruptcy risk, the implied price falls to $57.50.
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