Strategy Inc. Urged to Pause Bitcoin Buys as STRC Preferred Plunges 25%
MSTR•Strategy Inc. has been urged to pause Bitcoin acquisitions and rebuild dollar cash reserves as its preferred stock STRC fell to a record low near $75, signaling funding strain. Its $1.4 billion cash reserve covers just one year of 11.5% annual dividends, heightening concerns over capital access.
1. Funding Recommendation
An external analytics firm recommends that Strategy Inc. halt new Bitcoin purchases and rebuild its U.S. dollar cash buffer after STRC preferred shares traded well below their $100 par value, indicating weakening financial support for its accumulation model.
2. Preferred Stock Decline
STRC plunged roughly 25%, reaching an all-time low near $75, as investors grew concerned about the company's ability to sustain its 11.5% semi-monthly dividend under current market conditions.
3. Dividend Obligations and Cash Coverage
With annual preferred dividend costs of about $1.2 billion and only $1.4 billion in cash reserves, Strategy covers barely one year of payments, raising questions about its capacity to fund ongoing Bitcoin purchases without additional capital.
4. Management's Financing Flexibility
Company leadership emphasizes a diversified funding strategy, including equity offerings, preferred securities, convertible notes and potential Bitcoin sales, to maintain liquidity and support its Bitcoin accumulation despite market headwinds.
