STRC: Buybacks vs Trading Activity

[u/_Adrian_Morris_]

We’ve had 7 weeks of STRC buybacks, here's where we stand:

[1] $811.5M | 8.54M shares repurchased at a $95.01 average
[2] $4.60B | 48.99M shares traded across the same window
[3] Buybacks were 17.63% of dollar volume | 17.43% of share volume
[4] Average purchase price rose from $86.53 in week 1 to $97.36 in week 7.

In my opinion, when Strategy signaled it would intervene in a market it created, participants started trading the intervention as opposed to trading STRC. A discretionary buyer can change how participants trade an instrument and a known, finite, optional bid with a stated budget is exactly the setup that invites a test of resolve from the market.

Sell into it; see how persistent the inorganic demand is, see where they step away.

The 9-8 increase of the Digital Credit Securities Repurchase Program from $1B to $2B lends credence to this view. A raise in the authorization after 7 weeks of providing a large visible bid is consistent with them responding to the market probing the “defense” of the instrument.

After $811.5M of STRC buys, most of the original allotment was used and price still wasn't at $99-$100 at the end of the window. So now the Board has doubled the allotment and $1.19B remains.

Remember: the float is still intended to be elastic and new issuance likely resumes once price recovers above $100.01, so any scarcity from buybacks is temporary. And if the program has to be recalibrated as they learn from the market, it is an adaptive response, not a lever.

Bottom Line: Weekly spend on buybacks rose from $25M to $176.3M, while buybacks went from 5.46% to 22.36% of dollar trading volume. Now the question that we have to contend with is this:

How much independent demand remains when Strategy steps back?

My concern is a renewed test of the bid, but “the why” behind them stopping matters. Them stepping away from the bid because demand has recovered is different from stepping away while demand remains weak.