The strategy’s favorite perpetual stock, Stretch (STRC), fell as low as $97.11 on Thursday as Bitcoin slipped to the $73,000 mark.
STRC tends to face selling pressure during Bitcoin drawdowns and in the days immediately following its ex-dividend date, as seen on November 20 and February 5. The ex-dividend effect typically results in a price adjustment reflecting the value of the dividend, while periods of Bitcoin weakness can reduce investors’ appetite for securities linked to the strategy. Together, these factors have historically created short-term pressure on the market price of STRC.
The company has structured STRC to trade near its par value of $100, as maintaining this level allows Strategy to continue issuing shares through its all-market (ATM) program and effectively raise additional capital.
Strategy recently repurchased $1.5 billion of its 0% convertible senior notes due 2029, reducing its overall debt burden. However, the buyout was financed using cash from the company’s US dollar reserve. As a result, Strategy’s cash balance fell from approximately $2.25 billion to $871 million.
Based on the company’s current annual preferred dividend obligations of approximately $1.7 billion, the remaining cash reserve now only provides approximately six months of coverage, but was initially implemented to cover dividend obligations for 24 months.
Executive Chairman Michael Saylor discussed several potential sources of capital that could be used to meet dividend obligations and support the balance sheet in a recent interview with CoinDesk Principal Analyst James Van Straten. These include selling Bitcoin, issuing additional MSTR shares when the stock is trading above a multiple of 1.22 to net asset value (NAV), or raising capital through the issuance of STRC. Saylor emphasized that management evaluates these decisions through the lens of bitcoin per share, prioritizing actions that are accretive to shareholders.
Competing Bitcoin treasury company Strive Asset Management (ASST) has taken a different approach. The company recently announced daily dividend payments for its perpetual preferred security, SATA. Over the past two weeks, SATA has remained firmly anchored around its par value of $100 while offering a dividend yield of around 13%, even during Bitcoin’s decline.
Although the daily dividend mechanism has not yet been implemented, investors can view it as a stabilizing element that helps keep securities trading close to par.
Strive also eliminated all debt inherited from its acquisition of Semler Scientific, a balance sheet strategy that mirrors the direction Strategy appears to be following through its recent debt buybacks.
The gap in market performance between the two companies is notable. Over the past three months, Strive shares have gained about 110%, compared to a 12% rise in MSTR and an 8% rise in Bitcoin. This divergence suggests that investors may reward Strive’s healthier balance sheet and higher-yielding preferred structure.
