Author: Tao Zhu, Jinse Finance
Summary: On May 29, STRC dropped to $97.11 before recovering and closing at $98.57. Since then, STRC has primarily trended downward and is currently trading at $94.65. Such a decline has drawn market attention for a preferred stock designed to trade around its $100 par value over the long term.
I. What is STRC?
According to Strategy's official website, Stretch (STRC) is a perpetual preferred stock issued by Strategy, currently offering an annual dividend yield of 11.50%, paid monthly in cash. The dividend yield on STRC is adjusted monthly to encourage trading near its $100 par value and to reduce price volatility. STRC is listed on Nasdaq and is tradable on most major brokerage platforms.
“Preferred” refers to having higher priority than common stock in dividend distributions and liquidation. As a preferred share issued by Strategy, STRC ranks below bonds but above common stock. Specifically, the “priority” of preferred shares is reflected in two ways. First, preferred shareholders receive dividends before common shareholders; even when profits are insufficient, preferred shareholders are entitled to receive payments first. Second, in the event of company bankruptcy, preferred shareholders have priority in receiving compensation—unlike common shareholders, who may lose their entire principal, preferred shareholders may recover at least a portion of their investment.
STRC is essentially more of a "high-yield cash flow product" than a growth stock focused on capital appreciation. Many investors purchase STRC primarily to achieve a yield of over 11%, rather than to monitor whether the stock price rises.
II. Why Has STRC Recently Become Unpegged?
1. BTC price decline
Strategy's largest asset is Bitcoin, which is highly correlated with BTC's price. In late May, the broader crypto market experienced a significant correction: BTC's price dropped from a monthly high of approximately $82,000 to around $64,300 as of press time, a decline of 21.59%.
The rapid decline of BTC from its high triggered a sell-off in risk assets, putting corresponding Strategy-related products under pressure.
2. Pressure from competitors
Another Bitcoin asset management company, Strive Asset Management (ASST), has adopted a different strategy. The company recently announced that its perpetual preferred securities, SATA, will pay daily dividends. Over the past two weeks, SATA’s price has remained stable near its $100 par value, maintaining a dividend yield of approximately 13% even as Bitcoin’s price declined.
Over the past three months, Strive's stock price has risen by approximately 110%, while MSTR increased by only 12% and Bitcoin by just 8%. This divergence suggests that investors may favor Strive’s more robust balance sheet and higher-yielding preferred share structure.
Note: Strive was originally an asset management company founded in 2022 and headquartered in Dallas, Texas, USA. It initially focused on issuing ETF funds and was known for its philosophy of “shareholder value maximization.” Beginning in 2025, Strive underwent a major transformation, adopting a model similar to Strategy—becoming a Bitcoin reserve company and issuing preferred shares.
Inspired by Strive’s daily dividends, the announcement states that Strategy proposes changing the STRC dividend distribution frequency from monthly to biweekly. If approved and implemented, this change is expected to reduce the reinvestment lag, enhance liquidity and market efficiency, and improve price stability.
This proposal requires joint voting approval from both MSTR and STRC shareholders, and it can only pass if both classes vote in favor. According to the proposal timeline, voting began on April 28 and will conclude on the meeting date, June 8. If approved, the first record date under the new schedule will be June 30, and the first dividend payment date will be July 15. Shareholders eligible to vote must hold shares by April 17.
3. Technical selling
Strategy hopes to maintain STRC near $100 in the long term. After STRC’s price falls below $100, many quantitative funds may interpret this as a sign that the market is questioning the product’s pricing mechanism, potentially triggering actions such as passive position reductions, technical stop-losses, and arbitrage capital withdrawal, which could further amplify the decline.
III. Is there a default risk for STRC?
There is currently no apparent risk of default.
Previously, investors were focused on whether Strategy would ultimately sell its Bitcoin to repay debt or pay dividends, or whether it would continue using funds raised from securities offerings to expand its Bitcoin holdings. Saylor responded on X: “Work is going well.”
On June 1, Strategy founder Michael Saylor confirmed that the dividend rate for the perpetual preferred stock STRC will remain unchanged at 11.50% through June 2026. There have been no reductions, suspensions, or defaults on STRC dividends—all is proceeding as normal.
Second, Strategy still holds a substantial reserve of Bitcoin. With 843,706 BTC in reserve, Strategy leads all corporate BTC treasuries, accounting for 4.01% of the total 21 million BTC supply. As long as Bitcoin does not experience a prolonged downturn and the company’s funding channels remain open, STRC’s cash flow pressure remains manageable.
What do industry insiders think?
Forbes noted that STRC went public in July 2025, becoming the largest U.S. IPO of the year with $2.521 billion in proceeds, and pays monthly dividends of approximately $80 million to $90 million. By openly and intentionally selling small amounts of Bitcoin to meet these obligations, Strategy signaled to rating agencies that it treats preferred shareholders as senior creditors. This credibility makes STRC more attractive. Increased demand for STRC means more capital raised, which in turn leads to more Bitcoin being purchased.
Benchmark analyst Mark Palmer noted: "Investors should now view Strategy's Bitcoin holdings as a reliable backup for preferred dividend financing."
Prominent gold advocate and cryptocurrency critic Peter Schiff posted on X: “Most STRC investors will likely lose most of their money, as STRC’s price will eventually collapse once Michael Saylor is forced to cancel dividend payouts. At that point, a wave of lawsuits is expected to further exacerbate the challenges facing Strategy (MSTR). Investors who suffered losses due to misleading promotions are anticipated to seek legal recourse to recover their investments.”
The Motley Fool believes: First, focus on STRC’s inflation issue. Inflation delivers a double blow: it erodes the real value of your $100 stock and reduces the value of the dividends you receive. The longer you hold this stock, the more severe the impact of inflation becomes. Second, Strategy can easily cut or delay dividends without triggering traditional debt defaults. Therefore, if the price falls below par, new share issuances will stop, leaving you with an asset that yields less than originally advertised and whose principal may not be recovered in the short term—or ever.
Summary
STRC has recently declined from around $100 to $94.65, primarily due to factors such as the drop in Bitcoin price, competition from peers, and technical selling. Currently, STRC does not face a default risk; the company continues to pay dividends at an 11.5% rate and maintains it as a core financing instrument.