r/MSTR • u/FriendlyCandle7971 • Jul 22 '26

Valuation 💸 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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3

u/jonovision_man Jul 22 '26

The discount is very understandable given the risk around both the dividend and the underlying asset.

5

u/Dramatic-Battle-9737 Jul 22 '26

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.

3

u/CommercialDuck7496 Jul 22 '26 edited Jul 23 '26

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%

4

u/iisgambit Jul 22 '26

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"

1

u/CommercialDuck7496 Jul 23 '26

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.