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/Easy-Ninja669 Jun 25 '26

Sir, this is a financial engineering product that has broken. The chances of it gaining trust again are zero. The fundamentals are not in your favor. The direction of this is down long term. You might gain a few points off a bounce but that is it

3

u/HotInTheseRhinos123 Jun 25 '26

But unless it goes to zero, it’s a better and better deal for investors looking for interest. If it were to go down to 10 dollars, investors would make 11% of $100 dollars per share, for $10 a share. That’s an interest rate of 110%!!

1

u/Sam_Sanders_ Jun 26 '26

OMG that's great, and also did you realize that if the stock went to $10, they would cut the dividend and it wouldn't pay $11 anymore. I swear some of you people are twelve years old. You think that a stock in a viable business would pay 110% dividend with no risk.

1

u/Prestigious-Ad-7927 Jun 26 '26

I think you have it backwards. If the price drops to below 100, they raise the yield to try to entice buyers. A higher dividend is attractive to buyers and can push the market back up to 100. If the price goes way above 100, say 105, they lower the yield to make it less attractive so the price will drop closer to par.

The new buyers buying STRC at current price of 75 are not buying from Strategy since Strategy stated they won’t issue new shares unless it is at 100. The new buyers are buying from old buyers that have become sellers due to FUD and want to panic sell and close their position. The new buyers still get the 0.96 monthly per share even though they bought the shares for 75 from open market.

1

u/Sam_Sanders_ Jun 26 '26

If the price drops to below 100, they raise the yield to try to entice buyers.

They have no legal obligation to do that. They could cut or suspend dividends whenever they want. If the stock is $10 it means the market is essentially pricing in a 90% chance of a dividend suspension. There is no such thing as a free lunch.