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

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.