The STRC stock price continued its strong retreat today, June 23, settling at $87.31. This retreat was a continuation of a sell-off that started on May 15 when it officially de-pegged from its $100 par value.
The Variable Rate Series A Perpetual Stretch Preferred Stock dropped further despite a recent statement by Phong Le, Strategy’s CEO, who announced that he bought shares worth $1 million. He plans to hold his position until it rebounds to $100 and even longer.
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The STRC crash has coincided with the ongoing retreats in Bitcoin and MSTR stock. Bitcoin price dropped from this month’s high of $67,000 to $62,600. MSTR, on the other hand, dropped to $103, its lowest level in two years.
While Strategy has long been a controversial company, STRC has sparked even greater debate, with some analysts describing it as a Ponzi scheme.
STRC is popular for two main reasons: its promise of stability around the $100 peg and its high dividend yield. The data show that the stock pays an effective yield of 13.7%. This yield is much higher than what government bonds are paying today. SCHD, one of the biggest dividend ETFs, yields less than 4%.
And most recently, it started paying its dividend twice a month, making it an ideal play for investors. It gets this yield from Strategy’s balance sheet and from its software business.
Strategy now holds over $1.4 billion in cash, which is enough to pay its dividend for almost a year. Estimates are that the company’s annual preferred dividend payments are approaching $1.7 billion.
Saylor argues that fears about the company’s business are unfounded, as the company has sufficient cash to meet its payouts. In a worst-case scenario, the company has argued it could sell its Bitcoin holdings to pay its investors. Recently, it sold 32 coins, possibly as management tested this process.
Despite the MSTR’s and STRC’s weakness, Strategy has continued to accumulate Bitcoin. It bought 520 coins for $35 million last week, bringing its total holdings to 847,363. In total, the company has incurred over $10 billion in unrealized losses on its Bitcoin accumulation strategy.
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