Strategy's perpetual preferred stock STRC is trading near $88 as of press time, down more than 11% over the past month and at its lowest level since its July 2025 launch, according to a TheStreet report. Jeff Dorman, chief investment officer at digital-asset firm Arca, posted an analysis on X on June 17 outlining three scenarios for the company's Bitcoin funding mechanism, assigning a 70% probability to continued stock dilution that would push MSTR toward 0.70 mNAV. The breakdown in STRC's funding loop — which relies on the stock trading above its $100 par value to issue new shares and purchase Bitcoin without diluting common stock — has left Strategy with limited options to stabilize its capital structure.
STRC Funding Mechanism Breakdown
STRC launched in July 2025 through a roughly $2.5 billion IPO. The instrument pays an 11.50% annual dividend distributed semi-monthly in cash, with the rate adjusted monthly to keep the stock trading near its $100 par value. When STRC trades above $100, Strategy issues new shares and funnels the proceeds into Bitcoin without diluting common stock or breaching debt covenants. The loop only functions above par.
Dorman Assigns Probabilities to Three Strategy Scenarios
Dorman assigned rough odds to three outcomes in his June 17 X post. His base case, at 70%, is that Strategy keeps selling small amounts of MSTR monthly at "non-accretive levels," crushing the stock toward 0.70 mNAV while giving STRC holders "a glimmer of hope." He put a 25% chance on Michael Saylor selling $3–$4 billion worth of Bitcoin to buy time. A 5% probability was assigned to the "nuclear option" of killing the dividends, which would close capital markets to the company but halt a $1.7 billion annual cash drain.
Dorman wrote that the only short-term way to "save $BTC and $MSTR" is "Either sell an enormous amount of BTC and MSTR to help bring STRC back up near par, and at least buy yourself some time, or continue to watch every part of your cap structure melt because of the uncertainty you've created." He added that Strategy's mNAV stands around 1.15 and predicted the company is "still going a lot lower (should trade at a discount to NAV now)."
Strategy's Current Bitcoin Holdings and Financial Metrics
As of press time, Strategy holds 846,842 BTC worth around $53.4 billion. The company's USD reserve holds $1.1 billion. Strategy has about $6.754 billion in debt, while the aggregate notional value of its preferred stock, including STRC, stood at $15.475 billion. MSTR stock closed 3.46% lower at $112.53 on Thursday.
FAQ
What is Strategy's STRC perpetual preferred stock?
STRC is a perpetual preferred stock launched by Strategy in July 2025 through a roughly $2.5 billion IPO. It pays an 11.50% annual dividend distributed semi-monthly in cash, with the rate adjusted monthly to keep the stock trading near its $100 par value. When STRC trades above $100, Strategy issues new shares and uses the proceeds to purchase Bitcoin without diluting common stock or breaching debt covenants.
What scenarios did Jeff Dorman outline for Strategy on June 17?
Jeff Dorman, chief investment officer at Arca, posted an analysis on X on June 17 assigning probabilities to three outcomes. He gave a 70% chance to continued monthly MSTR sales at non-accretive levels pushing the stock toward 0.70 mNAV, a 25% chance to selling $3–$4 billion in Bitcoin to stabilize STRC, and a 5% chance to eliminating dividends to stop a $1.7 billion annual cash drain.
What is Strategy's current mNAV?
As of the report, Strategy's multiple of net asset value (mNAV) stands around 1.15. Dorman predicted the company is "still going a lot lower (should trade at a discount to NAV now)." mNAV is a ratio used to judge whether a company's stock is trading above or below the value of the Bitcoin it holds.
