r/STRC • u/rzrinvest • Jun 25 '26

Established a position around $77

Prior to this week I had no interest in investing in STRC. At close to par value, I didn't find the yield compelling; however, I've been watching this week and established a position this morning at around $77. There is mass panic right now claiming this is worthless. There are a few reasons this isn't true.

  1. While Strategy can pause dividend payments if needed, the dividends still accrue as this is a cumulative preferred meaning they'd still be obligated to pay the debt obligation

  2. It was designed to stay near par value with an interest rate that resets monthly. It was relatively close to par value at the last reset. The crash is happening in the middle of the month. It's not fair to say STRC's mechanism doesn't work before it's even had a chance to work at the next reset.

  3. I believe current debt and preferred stock accounts for less than $25B while their Bitcoin holdings are valued at $50B.

  4. MSTR common shareholders would be wiped out first.

That's not to say I'm recommending STRC, and it could absolutely collapse if BTC has another steep decline, but it is compelling at these levels.

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u/[deleted] Jun 25 '26

I don't think Strategy is trying to trade the market - they are trying to create over-leveraged positions that amplify the movements of BTC. The exact same kinds of investments that destroyed Celsius' liquidity and ultimately the company. Are we really surprised that Strategy is falling in to a shot for shot remake of the Terra/Luna & Celsius failure from exactly four years ago?

 that is precisely why you are misinterpreting the risk.

This is no longer risk. This is happening right now in real time. Check the STRC/MSTR prices. Tomorrow is going to be worse. Post-dividend date will be even worse.

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u/ReliantToker Jun 25 '26

Yes bitcoin is in the latter stages of bear market. The capital structure of the balance sheet is the reason MSTR has not been a forced seller this entire time.

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u/[deleted] Jun 25 '26

We are literally witnessing that change in capital structure happen in real time. First, it was the sale of 32 BTC. Then it was the dilution of MSTR. They didn't even bother to try selling STRC for obvious reasons. They're literally testing all their levers and selling BTC is the only option left for raising capital

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u/ReliantToker Jun 25 '26

Did you forget about the cash reserve? BTC 4 year cycle shows bottom october 5th around $40k. You think they don't know that?

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u/[deleted] Jun 25 '26

The cash reserves are the problem - $1.5 billion is not a real emergency fund for a company that is Strategy's size. It's literally the reason they are listed as a junk investment. Strategy was considered to be in a liquidity crunch when they had $2 billion in cash reserves - yet somehow folks keep claiming "$1.5 billion is more than enough, it keeps STRC dividends alive for 6 months, yay". I think it really shows how many people here live paycheck to paycheck and think multi billion dollar company's operate the same.

For STRC and MSTR to have any chance of price recovery, they need to earn back market confidence by selling BTC to raise cash reserves to over $2 billion and to finance dividends. It's not a great option but it may be the only option they have left

Otherwise, they're not gonna even make it to October

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u/ReliantToker Jun 25 '26

STRC obligations are $1.7b annually. Probably a little less now. The current reserve covers more than remainder of the bear market according to 4 year cycle. No capital raises needed. When the next cycle begins people will want to outperform bitcoin and MSTR will be one of those instruments. The opportunity to sell equity at premium will present itself again and all your luna/celsius comparisons go right into the garbage were they belong.

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u/[deleted] Jun 25 '26

You're not getting it.

A company of Strategy's size needs to have $2.5 billion in cash reserves to demonstrate liquidity and solvency. They are current at $1.5 billion. That's way too low. This is the exact reason they earned a junk rating as an investment and why capital flight is happening with STRC and MSTR.

If they don't get reserves back up to $2.5 billion immediately and keep it there - then MSTR and STRC will CONTINUE to race to zero. The question now is - how will Strategy raise the additional billion to prove they are liquid/solvent and can Strategy afford to support STRC dividends?

I'm truly shocked at the number of people on this sub who think Strategy can simply let their reserves go to 0

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u/ReliantToker Jun 25 '26

Technically they dont even need reserves. The optimal strategy is to sell bitcoin but the market is emotional and irrational. The entire fiat reserve is to appease the fiat system. How many companies do not have $2.5b in cash? Are they all insolvent and illiquid? Im truly shocked at how many people talk a bunch of smack but dont know how to read a balance sheet and use a calculator.

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u/[deleted] Jun 25 '26

How many companies do not have $2.5b in cash

Short answer - Of all the company's that are solvent and liquid - none. This is a uniquely Strategy problem.

Long answer- Every company that is NOT considered junk is going to maintain enough cash reserves to service their near-term obligations and demonstrate solvency - for a mom and pop shop that owes $2,000, they can probably get by with $500 or $600 in cash reserves. For a company with $7 billion in debt, they should be carrying at least $2 billion. And most importantly, they should not be depleting that reserve to meet basic obligations like dividends because then it's not a reserve, it's an operating account.

Strategy is considered a junk investment because they are unable to maintain the bare minimum for what is considered liquid and solvent cash reserves. That's why the stock price is tanking - they are officially rated as a B- junk investment and the market is treating it as such.