Key Takeaways
- STRC finished Thursday’s trading at $88.59 after touching an intraday bottom of $82.50 — representing the most extended period beneath the $100 par value threshold since the July 2025 listing
- Daily trading activity exploded to 10.7 million shares, dramatically exceeding the typical range of 3.4–3.5 million shares
- According to Arca’s Jeff Dorman, Strategy might be forced to liquidate $3B–$4B worth of Bitcoin holdings to bring STRC back to par value
- TD Cowen reaffirmed its Buy recommendation on MSTR stock with a $400 target price, even as shares declined 4% to close at $112.53
- The company has temporarily suspended STRC’s at-the-market offering program due to trading below par
Strategy’s preferred equity instrument STRC ended Thursday’s session at $88.59, recording its second straight closing price below $90 and establishing the most prolonged trading period under its $100 par value benchmark since the security’s July 2025 launch.
Throughout Thursday’s market hours, STRC plummeted to an intraday trough of $82.50 before staging a modest comeback. The preferred security was structured to maintain par value trading through a variable dividend mechanism — presently established at 12.9% with monthly recalibration.
Share volume exploded to roughly 10.7 million on Thursday, a stark contrast to the standard daily turnover of approximately 3.4 to 3.5 million shares. This represents one of the most active trading sessions in the preferred stock’s history.
Due to STRC’s decline beneath par value, Strategy has frozen the security’s ATM offering mechanism. Under normal circumstances when STRC trades above $100, the company issues additional shares to acquire Bitcoin.
MSTR common equity also experienced significant weakness, finishing the session down 4% at $112.53.
Potential Solutions for the STRC Situation
Arca’s Chief Investment Officer Jeff Dorman outlined the available pathways candidly on X, characterizing the “MSTR pickle continues.”
Dorman’s primary scenario — which he assigns a 70% likelihood — involves Strategy continuing to offload modest quantities of MSTR common stock monthly at dilutive levels. He suggests this approach provides STRC shareholders with “a glimmer of hope” while preserving the majority of Bitcoin reserves, though he cautions MSTR equity “would get hammered.”
His alternative scenario, assigned a 25% probability, represents a more aggressive approach: Strategy liquidates between $3 billion and $4 billion in Bitcoin holdings. Dorman indicates this would “buy a ton of time” and benefit STRC holders, albeit creating near-term headwinds for Bitcoin prices.
The final possibility — what Dorman labels the “nuclear” outcome at 5% probability — would see Strategy suspending payments on dividend-reliant preferred instruments. This could leave preferred shareholders recovering just 30 to 40 cents per dollar and would probably exclude Strategy from capital markets access completely. However, it would eliminate what Dorman calculates as a $1.7 billion yearly cash obligation.
TD Cowen Maintains Optimistic Outlook
Not all analysts are sounding alarm bells. TD Cowen reaffirmed its Buy rating on MSTR Thursday, preserving a $400 price objective while also voicing confidence in Strategy’s collection of preferred securities, including STRC.
The investment bank positioned Strategy as evolving beyond a straightforward leveraged Bitcoin vehicle toward what it describes as a “Bitcoin capital markets platform.”
TD Cowen’s research team referenced three investor conferences with CFO Andrew Kang, observing that in the immediate term, the organization may emphasize reserve reconstruction and preferred support rather than additional Bitcoin acquisitions during challenging market environments.
Peter Schiff escalated concerns beyond most observers, cautioning via social platforms about prospective legal action against Michael Saylor’s Strategy regarding STRC’s persistent deterioration.
Dorman also challenged MSTR’s broader valuation framework, calculating the company possesses approximately $35.2 billion in unencumbered Bitcoin collateral versus a $40.4 billion equity capitalization — positioning MSTR at 1.15x mNAV. He contends the stock “should trade at a discount to NAV now” and faces additional downside pressure absent a swift Bitcoin price recovery.
