Strategy Preferred Stock Falls 25% to $75, Dividend Costs $1.2B
STRC•Strategy's preferred stock plunged 25% to a record low of $75 after Bitcoin slid to $58,115, its weakest level since September 2024, dragging STRC sharply lower. Annual dividend obligations of about $1.2 billion now strain the company's $1.4 billion cash reserve, raising funding concerns despite Arkham's view that no crisis exists.
1. Bitcoin Slump Triggers STRC Sell-Off
Bitcoin dropped below $58,115, its weakest since September 2024, erasing over 20% in a month and dragging Strategy's preferred stock down 25% to a record low of $75. Investors sold STRC amid worries over funding rich dividends as Bitcoin holdings trade below their average purchase price.
2. Dividend Obligations and Cash Reserves
STRC carries an 11.5% dividend that costs approximately $1.2 billion annually, while Strategy disclosed a $1.4 billion cash reserve on June 22, covering barely a year's obligations. The dividend is board–declared from legally available funds, heightening scrutiny on the firm's ability to sustain payouts.
3. Term Amendment and Legal Risks
On June 23, Strategy amended STRC’s terms to steer prices toward its $100 stated value, granting the board discretion to adjust the dividend rate. Reports indicate potential investor claims over alleged misleading business information, suggesting securities law litigation could emerge.
4. Comparison with Terra Luna
Unlike Terra’s algorithmic model that forced token minting and triggered a death spiral on depeg, STRC dividends are discretionary and can be modified by Strategy’s board. There is no automatic liquidation mechanism if STRC falls below par, insulating it from a mechanical collapse.
