STRC by Strategy (formerly MicroStrategy) is now offering investors more than 28% upside potential if it returns to par and pays its dividends over the next year. But investors keep selling it anyway.
Over the last week, STRC has declined 2% and is down 11% in 30 days. These sales in the face of Strategy’s generous offer are votes of diminishing confidence in management, including founder Michael Saylor.
As of today, STRC was paying a 12% annualized dividend at full par value of $100 yet was on sale for under $86 per share.
If that stock returns to Strategy’s intended $99-100 trading range and pays its dividends, investors would earn a total return of at least 15% on their stock price appreciation plus a stream of semi-monthly dividends.
Even better, those dividends have beneficial tax treatment as return of capital, meaning that 12% is even higher than 12% for many investors on a tax-adjusted basis.
The looming tax bill of Strategy preferreds
Moreover, the rally from sub-$86 to over $99 per share could occur anytime, not simply at a 12-month maturity. This would make the time-weighted value of any early 15% rally worth even more than if it rallied evenly across 12 months.
In addition, as if the offer wasn’t already sweet enough, Strategy pays its 12% dividend rate on each share’s full $100 par value, not based on the USD value of investors’ STRC holdings.
That means that an investor buying STRC below $86 per share is actually earning an effective dividend yield over 14% plus return of capital tax treatment.
Adding these numbers — 15% plus a tax-advantaged 14% — makes the offer sound almost too good to be true.
For many investors, an opportunity over 28% probably is.
Corporate objective for STRC to trade at $99–$100
Michael Saylor keeps saying he wants STRC to trade at $99-100, and investors could earn over 28% if it does within a year. Yet the market keeps selling.
The risk to counterbalance STRC’s incredible offer is, of course, that the price of STRC keeps declining anyway.
There is, after all, no guarantee by Strategy that STRC will ever rally back above $99. In fact, it could trade at any price down to $0.
It’s simply a preferred stock that Saylor’s company issued to fund $BTC purchases. It’s changed hands for as low as $71.25 on the Nasdaq.
In other words, management has promised to defend $99-100 over the long term, yet they allowed it to trade 28.75% below par in the meantime. Not good.
Its own filings say its board intends to maintain the trading price of STRC near $100.
Yet even as the company funds an effective yield of roughly 14%, a return dwarfing junk bond yields and rivaling credit card rates, investors are still wary.
Strategy’s STRC hit another all-time low today
STRC traders refuse to bid at par
Strategy built STRC to behave like a high-yield bank account or money market with a fatter payout rate, even though it’s nothing like an insured savings product.
No FDIC insured bank account or money market is allowed to lose money like the price of STRC.
Were a rational investor to have full confidence in Strategy to sustain its above-average dividend payouts, they should pay up to the full $100. Yet no one is doing that right now.
In an attempt to reinstill confidence, Strategy has hiked it dividend rate from 9% at STRC’s July 2025 debut through a long series of hikes to 12%, yet the price of STRC continues to deteriorate.
Each increase in dividend and decrease in stock price concedes that demand is too weak and uncertainty is still too high.
Paying $1.25 billion and STRC still in the mid-$80s
The cost of a quasi-peg that won’t hold is costing Strategy $1.25 billion annually in dividend payouts. And this figure is rising rapidly.
The reason bidders stay away sits in Strategy’s own disclosures. The company can change or suspend the dividend at will, guarantees nothing about the share price, and gives holders no way to redeem STRC for the $100 they want.
Worse, Strategy is now selling the asset meant to make its whole scheme work.
On July 6, Saylor disclosed that Strategy sold 3,588 $BTC to fund dividends. Strategy’s stocks like STRC are, in theory, supposed to be supported by a growing treasury of $BTC that has, in recent weeks, shrunk.
$BTC was trading on thursday near $62,700, down 28% year to date. MSTR, Strategy’s common stock, opened for trading today down 38% year to date, amplifying $BTC’s losses to the downside.
