MicroStrategy’s STRC Preferred Stock Trades 26% Below Par as Dividend Costs Hit $1.2 B
MSTR•MicroStrategy's STRC perpetual preferred shares are trading around $74, a 26% discount to the $100 par value, as annualized dividend obligations have risen to $1.2 billion and coverage has shrunk to 14 months. The company sold 32 BTC in late May to fund these dividend payments, raising concerns over its leveraged financing model.
1. Preferred Stock Discount and Dividend Pressure
MicroStrategy’s STRC perpetual preferred shares have declined to about $74, roughly 26% below their $100 par value, reflecting investor unease over the firm’s growing financing burdens. Annualized dividends tied to STRC have climbed to approximately $1.2 billion, shrinking the dividend coverage window from over seven years to about 14 months and intensifying viability questions.
2. Bitcoin Sale for Dividend Payments
In late May, MicroStrategy liquidated 32 BTC—the first sale of any of its Bitcoin holdings—to meet STRC dividend obligations, drawing heightened scrutiny of its capital structure. The firm still holds more than 843,000 BTC, representing about 76% of all Bitcoin on public company balance sheets.
3. Critique of Leverage-Driven Strategy
Ripple CEO Brad Garlinghouse labeled MicroStrategy’s borrow-to-buy Bitcoin approach a “damning indictment,” arguing that financial engineering without tangible utility creates market pressure but fails to generate sustainable value. He maintained a bullish outlook on Bitcoin itself while distinguishing between asset potential and the risks introduced by heavy leverage.
