In a striking turn of events, Strategy’s preferred stock, STRC, closed at $88.59 on Thursday, marking its second consecutive day below the $90 threshold and the longest stretch under its $100 par value since its IPO in July 2025. This decline has raised eyebrows among investors and analysts alike, with many questioning the sustainability of Strategy Inc.’s financial strategies.
During Thursday’s trading session, STRC hit an intraday low of $82.50 before making a slight recovery. The stock was initially designed to trade at par, offering a variable dividend currently set at 12.9%, which is adjusted monthly. However, the marked decline in its trading price suggests that the market is signaling a lack of confidence in the stock’s yield.
Trading volume surged dramatically, reaching approximately 10.7 million shares exchanged on Thursday, far exceeding the daily average of around 3.4 to 3.5 million. This surge in trading activity indicates heightened investor concern and speculation surrounding Strategy’s financial viability.
Analysts have highlighted that with STRC trading below par, Strategy has paused its At-The-Market (ATM) program, which typically allows the company to issue new stock to acquire Bitcoin when the preferred stock trades above $100. This pause raises further concerns about the company’s ability to stabilize its capital structure.
Strategy’s common stock, MSTR, did not fare any better, closing down 4% at $112.53, reflecting broader investor apprehension. Amid these turbulent times, Jeff Dorman, Chief Investment Officer at Arca, outlined potential scenarios for the company’s recovery. Dorman noted that continuing to sell small amounts of MSTR stock each month might provide a glimmer of hope for STRC holders while safeguarding Bitcoin holdings. However, he cautioned that this approach could significantly impact MSTR’s stock performance.
In a more drastic scenario, Dorman suggested that Strategy might need to sell between $3 billion and $4 billion in Bitcoin to restore STRC to par, a move that would likely buy the company some time but could negatively impact Bitcoin’s market performance in the short term. The most severe option, which Dorman assigns a low probability, would involve halting payments on dividend-dependent preferred securities, potentially leading to significant losses for preferred holders.
Despite the bleak outlook for STRC, not all analysts are sounding the alarm. TD Cowen maintained a Buy rating on MSTR, keeping a price target of $400 and expressing confidence in Strategy’s broader vision as a “Bitcoin capital markets platform.” The firm noted that the company might prioritize rebuilding reserves and supporting preferred stocks over purchasing new Bitcoin in unfavorable market conditions.
While some investors are growing increasingly critical, with figures like Peter Schiff warning of potential legal ramifications for Strategy’s leadership, others remain optimistic about the company’s long-term prospects. Dorman has raised concerns over MSTR’s overall valuation, suggesting that the stock should trade at a discount to its net asset value unless Bitcoin rallies quickly.
As the market continues to react to these developments, all eyes will remain on Strategy and its ability to navigate these turbulent waters. Investors will be closely monitoring how the company addresses its capital challenges and what steps it will take to restore confidence in its preferred stock and overall financial health.
