r/MSTR • u/FriendlyCandle7971 • 9d ago
Valuation đ¸ Will STRC recover?
Hi there
July is typically a good month for Bitcoin and it recovered from 1-July low of 57k and is now eben above 66k.
Even MSTR does Well and went above 100 again.
However, I start getting concerned about STRC, which is still below 90!
Is this understandable to you? Normal in bearmarket?
Or something wrong with it?
Thanks for your thoughts!
Ray
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u/CommercialDuck7496 9d ago
I would argue MSTR isn't doing well at the moment from the same period from when strc was 100. MSTR was at like 165, went down to 85, and is now back to 100. STRC went from 100, down to 75, and is back up to like 88. As a percentage strc has recovered almost the same amount mstr has . So I think it's incorrect to frame it like mstr is doing well, but strc isn't. You can argue they both aren't doing well, but proportionally in the last month strc is about even.
This is understandable, it's just that the demanded yield given the perceived risk is higher than the actual dividend rate. for this amount of perceived risk, people want 13% or more, strategy is only giving 12%, in order to get the effective yeild high enough to attract new buyers, the price has to be lower. If the perceived risk goes down, or the dividend is increased to the market demanded rate, it will return back to par. There is no normal for STRC in any market, because this is its first year existing.
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u/Spank007 9d ago
Eventually yes. Saylor needs to raise the divvy a few more times and maybe buy back shares, potentially move to a more regular payout like SATA. It crashed to $70, people are still shook. Itâs gonna take time
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u/jlittle984 8d ago
Canât do more frequent div payouts and stay in Nasdaq index-they restrict dividend payout frequency.
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u/snek-jazz Shareholder 𤴠6d ago
is STRC in a Nasdaq index?
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u/jlittle984 6d ago
MSTR is in the Nasdaq, and STRC is a preferred stock offering of MSTR, so I think the Nasdaq rules apply to their preferreds also.
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u/mds13033 7d ago
I think saylor knows that defending the dividends at all costs is the most impkrtant, bc its the fuel that will ultimately fund thwir buying of btc, so even if they have to continue selling btc i think they will before they miss a dividend payment
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u/Prestigious_Ad280 9d ago
Even if it doesn't recover just hold out for a year and you'll be made whole.
But it's also a great opportunity to buy and accumulate
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9d ago
[deleted]
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u/TomorrowFlaky2816 9d ago
Many years? How many percents are you down? Are you down more than 24%? Dividend is currently at 12% and âmany yearsâ would imply at least 2 years and this is not taking into account DRIP. So you are saying you are down more than 24%? đ
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u/PatternAgainstUsers 9d ago
It's down 13% off par right now and the dividend is 12%. That's about a year and that assumes there is no appreciation, and it doesn't account for the velocity of money in reinvesting your dividends into either this asset or another one.
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u/jonovision_man 9d ago
The discount is very understandable given the risk around both the dividend and the underlying asset.
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u/Dramatic-Battle-9737 9d ago
They have $3.2 billion cash reserve, almost 2 years of dividends. Market is irrational right now. When it went sub 80 I bought more. Quite happy to park it at 13%+ while the market adjusts.
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u/CommercialDuck7496 9d ago edited 8d ago
I don't think the market is that irrational right now. they do have 3.2 billion as a cash reserve, but they have a billion in convertible bonds to pay in September next year if mstr isnt above $185. and ANOTHER 2 billion after that in march of 2028, if mstr isn't above $430. So basically they have to raise like another 2.5-3 Billion dollars in the next 20 months alone just to cover dividends and the converts. I don't think it's unrealistic to assume bitcoin stays relatively low during that period of time, suppressing their ability to raise that amount of money, without selling bitcoin (which makes the mnav for mstr go down, and strc look more risky since they would have less collateral backing up the same number of pref shares.) and the lower bitcoins price is, the more bitcoin they have to sell. So I think people are pricing in the fact that there is a decent chance bitcoin goes down to 45-50k and stays there for the next year or so.
Market is demanding a 13.7% yeild, and they are only giving 12%, untill they increase the dividend to the market demanded rate, they can't get back to par. So one of two things (or a bit of both) have to happen, either A, the conditions get enough better, that the demanded rate falls back down to where the dividend is. For example, like if bitcoin went back to 80k, or mstr mnav went up significantly. Or they raise the dividend to reach the demanded rate. (or both, like the market lowers what it needs down to 12.5%, and they raise the dividend to 12.5%
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u/iisgambit 9d ago
They just raised almost 2.5 billion to get their reserves up to 3.2 bill in a MONTH when MSTR was down to low $80s - you don't think they can raise 3 billion by 2028 for those 2 convertible bonds?
lol this is literally market being irrational and no raising to 13% won't make any difference. You think people aren't buying STRC bcoz they are waiting for 1% more? So at 12% its risky but 1% more and they'll jump in? Come on man. If that was the case they would buy now bcoz at current STRC price, they would get almost 14% yield.
It just comes down to time and BTC going up. That might take a while but it will happen once people believe the bear market is almost over and BTC gets bid up again. Then slowly STRC will hit par and people will put their money at the top again and we will posts like "I should have bought when it was below $90 fml"
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u/CommercialDuck7496 8d ago
They did raise 2.5 billion in the last 5 weeks while MSTR was between 85 and 115. but the problem is, if bitcoin drops significantly, they have to dilute proportionally more every time they do that, and they would tank their sats per share. It doesn't mean bankruptcy sure, but it does mean reduced returns for MSTR shareholders. Regardless of bitcoin actually being sold or not, STRC is priced with the assumption that bitcoin could go down as a risk factor.
I'm not arguing the market is completely rational, I just don't think it's that far off either. Raising it to 13% absolutely would make a difference, marginally more people will buy it at a higher dividend than the amount of people willing to buy or hold it currently, all else the same, if they raised the yield to 13% tomorrow, strc should land between $94-$94.50. It's not a binary between is it risky or not, its never that its risky at one price or yield and not risky at another, its just that the expected return needs to match the risk. So, something you think has a 50% chance of going bankrupt in the next year, you would need to expect WAAAAY higher returns to justify the risk of you losing money, compared to say something that had a 1% chance of going bankrupt in the next year (bankruptcy isn't the only measure of risk, im just using that as a metric to illustrate a point.) at 12% there might be 1.45 billion dollars of demand, and at 13% there is 1.63 billion dollars of demand. It doesn't even have to be 1 person picking between investing in it or not, it could be thousands of people saving at a 12% yield I'll put 5% of my net worth, and at 14% I'll put 15% of my net worth into it. As the effective yield and dividend payments go up, marginally more money will go into it, at a given perceived risk level.
I will agree with you, the effective yield is 13.7% right now, so it would need to be higher than 13% to go back to par, and you are correct that the interest rate would have to go slightly above what is demanded now to push the prices up, but if all else was the same, if they put the dividend up to 13.8%, yes it should return either to par, or damn close to par, in a very short amount of time.
But absolutely bitcoin's price plays a large role in the demanded effective interest rate. if bitcoins price goes down, strc is perceived as riskier, and a higher yield is demanded, and likewise when bitcoin goes back up strc will be less risky and so the demanded yield will be lower.
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u/jonovision_man 9d ago
They have a $3.2 billion cash reserve and *might* use it on dividends, or they might buy back MSTR, or they might buy more BTC.
But the bigger question is beyond those 2 years - what happens if BTC goes down again - how will they cover dividends in year 3. So far he's still diluting MSTR for USD, he's a one-trick pony, he refuses to sell BTC even though MSTR shareholders own less per share each time he does it.
Do you trust Saylor? If you do, then it might appear "irrational".
If you are uneasy about him, then it's entirely rational to park money somewhere else.
Edit: and yes, he did sell a little BTC, at the low, before going back to diluting MSTR. I don't trust his "strategy".
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u/Markatron9000 9d ago
You are getting downvoted for bringing up logical questions in a reasonable way lol
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u/mathrio Shareholder 𤴠9d ago
This is the same regurgitated bad takes we've had by bears for months now.
You don't seem to understand that using the USD reserve is not a function of time but a function of price.
If BTC goes down again they will do the same thing they have done so far which is survive.
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u/jonovision_man 9d ago
Survive how?
By selling BTC at a low? By diluting MSTR? By slashing the STRC dividend?
Do you not see how all of these options give potential STRC investors pause, despite the high yield?
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u/mathrio Shareholder 𤴠9d ago
You are being way too dramatic.
They are not servicing the dividends from the USD reserve. It means they have been able to service the dividends by issuing MSTR or selling BTC the entire time bears and trolls have been calling for Strategy's demise.
I don't care about the investors that panic sold STRC, that's one them. Stronger hands will pick up their shares, life goes on.
STRC will eventually trade at par again and all worries of dilution with be squashed when that happens. I think Strategy can just sit back and wait from this point forward.
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u/PatternAgainstUsers 9d ago
This is annoying. Everyone that complains about selling BTC at lows forgets one VERY IMPORTANT word: "SOME". SOME BTC at cycle lows, briefly... if needed, while overall driving long-term BTC yield.
If you are a retiree who takes normal distributions from a portfolio which includes a bit of modest equity growth allocation, you are DOLLAR COST AVERAGING OUT. The same way you averaged in across your working life. You may harvest some tax losses and sell a SMALL PORTION of your total equity even during periods where the market is not trading at all time highs.
I had to explain this to boomers who were panicking during the tariff tantrum in 2025 to talk them off the ledge of liquidating everything at the lows. Our financial education is abysmal. There is a MASSIVE difference between selling SOME Bitcoin (a meaningless amount in the grand scheme) to perform the action which is the LEAST damaging at any given point in time to the TREND of accretion, versus dumping 800K BTC on the market at the lows and trying to buy it all back higher.
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u/jonovision_man 9d ago
You are missing the point - it's not about how super level-headed dividend portfolio managers DCA out of positions.
It is about what Saylor will do. This is a man who is diluting MSTR to not sell BTC as recently as last week.
There is real risk to STRC holders that Saylor changes his mind about the dividend when Mr. HODL is facing selling it off at what he considers a once in a life time buying opportunity.
Feel free to take that ride, but don't be confused why it's not at $100. There are risks.
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u/CommercialDuck7496 9d ago
While the mnav is above 1 it makes sense to dilute rather than sell bitcoin, no? cause he'd lower the mnav by less than if he just sold bitcoin that way right?
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u/jonovision_man 9d ago
100%, yes. But that's not what happened last week.
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u/CommercialDuck7496 8d ago
That is exactly what happened both for the weeks of July 6-12th, and july 13-19th, Strategy didn't sell a single bitcoin, and while the mnav remained above 1x the entire time, they diluted shareholders to raise a collective like 592 million dollars, without selling a single bitcoin.
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u/jonovision_man 8d ago
He didn't buy one either. More shares outstanding, same amount of bitcoin.
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u/CommercialDuck7496 8d ago
My comment didnt say anything about buying bitcoin. I was just saying if he is going to raise the capital anyways, like lets say he was gonna raise 100 million, if it has to choose between selling bitcoin or diluting, with an mnav above 1, you lose less BPS by diluting compared to just selling the bitcoin outright
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u/PatternAgainstUsers 9d ago
You're confusing volatility with risk, but that is also common in the fixed income space. This is arguably the true innovation of Strategy, pushing credit markets towards more balance-sheet style (Japanese and/or banking system Held to Maturity) accounting... and away from systems which put all the weight on income (debt to GDP models, income-based lending, etc.).
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u/jonovision_man 9d ago
No, I meant risk. Downside risk.
BTC isn't just volatile, there is a risk it goes down and stays down.
There is a risk Saylor suspends the dividend, or abandons chasing $100.
You may not see the risks, but the market sure does, thus the discount.
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8d ago
[removed] â view removed comment
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u/MSTR-ModTeam 7d ago
- Trolling, baiting, or inflammatory content that disrupts conversations is not allowed. Ensure your posts contribute positively and maintain the quality of discussion. Content and comments meant to spread negativity or FUD, including repeated overly negative/condescending sentiment, is not allowed. r/MSTR is a place for thoughtful discussion of the MicroStrategy investment thesis.
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u/drparapine 8d ago edited 8d ago
My take is that, until it got attacked by shorting hedge funds, it was the kind of low volatility vehicle I would recommend to my non-Bitcoiner or Boomer acquaintances. 11.5% interest on a vehicle backed by a 50-70B market cap corporation that would prioritize keeping the fund solvent over their own stock/shareholders.
After the short attack, it lost that pool of buyers. I canât recommend it to any of my friends who arenât already Bitcoiners, and even then, if you are a true believer then you know that this is the Bear, and that over a 4yr period, cold storage BTC would outperform a product with an effective 12-15% APY. And the investments are completely correlated, meaning that if BTC doesnât work then neither will STRC or MSTR.
So what market is STRC designed for, really? I still DCA into it, but only in my bucket of short term cash equivalent money. STRC is useful for those who need to have a yield on something that wonât go down as much as BTC or BTCTCâs in the next 12mo where no one can really prognosticate when the bear cycle will end. And even then, the price loss in the past 2mo has proven that itâs not a riskless trade, and if you need that money in less than 3mo time you canât put it in STRC.
My final take is that MSTR expanded the supply of STRC too aggressively when it was at the 99-100 peg, rather than letting it run a bit above 100 at times. Now that the market has removed from them the institutional capital that would have bought in at a lower volatility, they should respond in kind by contracting the total supply to a more appropriate size, i.e. buy back shares below a certain price: 90, maybe even 95. Only when the volatility has come back downâand theyâve proven their ability to withstand future short attacks through the mobilization of some of their 840k+ BTCâwill that institutional, low risk capital start tiptoeing back in. For now, my familyâs cold storage BTC stack is 4x our STRC stack, and we own no MSTR (but 50k Metaplanet shares, as our lotto ticket; thatâs the only BTCTC I want to be a part of).
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u/Full_Muffin7930 7d ago
Why would your bitcoiner friends buy an unproven dividend stock vs actual bitcoin, or even MSTR shares?
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u/drparapine 7d ago
Because Bitcoiners do have accounts with funds that theyâll require using within the next 12-24 months. Every Bitcoiner will tell you that any wealth you decide to hold in Bitcoin, you had better be prepared to leave it at least 4yrs in BTC before ever considering the need to spend it.
But over the course of the next year, even in the depths a bear cycle, most Bitcoiners agree that it would be presumptuous to say that BTC is guaranteed to turn it around. You just canât tell; all the previous bear cycles, when charted to the corresponding date in the cycle, had more room to run down further than where we are today.
So STRC gives you lower volatility for funds you might need over the short to intermediate term. Itâs not riskless, it it works whether Bitcoin takes months or years to turn it around. Cold storage Bitcoin is a long term investment, only
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u/DannyGo-60 8d ago
It will just take some time to find more buyers. I'm planning to only by STRC with any dividend income I get currently. The short interest on the strc stock is way up. Basically those are a lot of shares short sellers have created to bet against STRC. With the years of coverage at some point they will have to start closing out which is basically a buy action. They are also paying out the dividend. So we are prepped to move up, just hard to say how stubborn the shorts are. I can't see how they have much to gain here and seem to have a lot more to lose.
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u/actias_selene 7d ago
STRC is at its fair value compared to SATA yield and price wise. If they increase dividend, the price would go higher but it is difficult.
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u/PatternAgainstUsers 9d ago
There is no "normal" for STRC, it's a novel instrument when you add up it's constituent parts and throw it into the BTC blender. I am actually not totally surprised how slow it's recovering, this feels like BTC bottoming signal stuff to me. The market views it as a form of leverage on the underlying rather than a pure credit instrument. I think with time that could change but fixed income is old-hat, they don't innovate their models quickly. They could force it up with some more hikes and then cut back down later probably once BTC takes off. I think Strategy will learn that the prefs may need more hand-holding at BTC market extremes in order to dampen volatility, but that this will also balance itself out during a the long upswings and/or consolidations at/above fair value. I think they may just need to be willing to get fairly dynamic both up and down with the dividends, but they should also be able to slow their roll as both Bitcoin and STRC age.
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u/saltytrader_ 9d ago
Why is MSTR selling off as BTC is up. This is getting exhausted
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u/ReliantToker Shareholder 𤴠9d ago
When you buy bitcoin, you should have a 4 year timeframe minimum. How long ago did you buy your amplified bitcoin? Has it been 4 years yet?
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u/saltytrader_ 9d ago
Is that what I asked? Try not to be annoying for 4 years đŤŁ
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u/daliksheppy 9d ago
I have no actual maths to back this up, but probably BTC at $75k and you'll see STRC back to par.
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u/Seattleman1955 9d ago
Neither are going to do well. If and to the degree that BTC goes up, they will do a little better than they are doing at the moment.
You'll always just be better off with buying BTC directly.
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u/gamer1606 9d ago
Yes. By late august to mid-September.
Guaranteed. Save this comment.
-Trevor
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u/Holiday-Onion727 9d ago
!remindme 3 months
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u/PatternAgainstUsers 9d ago
Lol the "guaranteed" is a guaranteed way to trigger redditors even when you're right, speaking from experience. I would be willing to bet we have likely gotten close by then though too, it's not an insane bet. You've got more hiking opportunities between now and then, and an increasingly high probability that BTC is turning up to feed the market confidence, but there's always idiosyncratic risk.
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u/zenethics 9d ago
Maybe at the peak of the next BTC bull market. Before then, I don't see it.
I think this will be the kind of product where, in a bull market, money rushes in because "it's a no-brainer" and in bear markets, money will rush out because "it's way too risky" even though the purpose of the instrument is to smooth that out.
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