Strategy Preferred Shares Slip Below $84 Par Value, Funding Model Strained
STRC•Strategy's variable-rate perpetual preferred shares dropped near $84, below their $100 par value for the first time in over two years, pressuring the Bitcoin funding model. With $1.4 billion cash reserves against $1.2 billion in annual dividends, Strategy may require $2.8 billion to restore two years of coverage.
1. Preferred Shares Slide Below Par
Strategy’s variable-rate perpetual preferred shares dipped to around $84, trading below the $100 par threshold for the first time in over two years and raising concerns about the sustainability of its Bitcoin acquisition funding.
2. Cash Reserves and Dividend Coverage
The company held approximately $1.4 billion in cash reserves against $1.2 billion of annual dividend obligations, and analysts estimate it may need an additional $2.8 billion to restore two years of preferred dividend coverage.
3. Bitcoin Holdings and Market Impact
As of June 21, Strategy held 847,363 Bitcoin valued near $53 billion, while Bitcoin’s price slid to roughly $60,000, contributing to a more than 20% decline in common shares over the past week.
4. Analyst Views on Funding Model
Some analysts have reiterated buy ratings and price targets near $570 for the common stock, but they warn that Strategy should pause further Bitcoin purchases and rebuild its cash buffer to support dividend commitments.
