STRC Preferred Trades 5.2% Below Par with 63% Odds of Dividend Hike
STRC•STRC preferred shares are trading 5.2% below their $100 par value, with market-implied probabilities signaling a 63% chance of a dividend increase, an $88.50 valuation if payouts hold steady, or roughly $70 per share if dividends are suspended, per Khing Oei’s three-scenario framework. MicroStrategy funded its latest 1,587 Bitcoin purchase with a $209 million at-the-market common stock offering and boosted a $1.1 billion cash reserve specifically to cover cumulative STRC dividends, marking the first asset sale since 2022 to meet payout obligations.
1. Market Pricing and Discount
STRC’s preferred shares closed at a 5.2% discount to their $100 par value ahead of the June ex-dividend date. This gap reflects investor expectations over the upcoming dividend decision rather than concerns about solvency, given the cumulative structure that mandates repayment of any unpaid distributions.
2. Analyst’s Three-Scenario Framework
Investor Khing Oei models three potential dividend outcomes: a raise sufficient to restore par at $100, maintenance of the current 11.5% rate repricing the shares to about $88.50 based on a 13% yield, or a suspension scenario valued near $70 per share after discounting accrued dividends over a three-year recovery.
3. Funding Strategy and Cash Reserve
Between June 8 and 14, MicroStrategy sold $209 million of common stock to fund a $100 million Bitcoin purchase and directed the surplus into a newly expanded $1.1 billion cash reserve dedicated to servicing STRC’s semi-monthly cumulative dividends. The company’s first Bitcoin sale since 2022 to cover a dividend underscores the priority placed on maintaining preferred payouts.
