Written by:André Beganski
Compiled by:白话区块链
Decrypt pointed out that MicroStrategy's flagship preferred stock faced significant selling pressure on Thursday, with its price hitting a new all-time low after the company, which has been consistently buying Bitcoin, reiterated its commitment to continue making payments to its Stretch (STRC) shareholders.
At the time of writing, STRC is down 2.6% to $87.45, recovering somewhat from its intraday low of $82.53.
Although this preferred stock has not returned to its par value of $100 since mid-May, its performance is inherently cyclical: the price typically declines after STRC's ex-dividend date.
The ex-dividend date is the day from which investors who buy this flagship preferred stock will no longer be eligible for the upcoming distribution. By the end of this month, as STRC's next dividend payment date approaches, the company is expected to distribute approximately $100 million to investors.
James Butterfill, Head of Research at CoinShares, told Decrypt: "The continued weakness in STRC appears to be driven less by Bitcoin itself and more by market uncertainty about how MicroStrategy will fund and manage its growing fixed obligations. A Bitcoin rally would boost the value of the assets backing MicroStrategy, but it doesn't automatically increase its available cash."
Last year, the company established a cash reserve to manage its debt and dividends. At the beginning of the year, the company initially prepared $2.25 billion; but after repurchasing some debt at a discount, the cash reserve has now been adjusted to $1.1 billion.
STRC is designed to trade around its par value of $100. MicroStrategy has stated that when the preferred stock trades persistently below this level, it can stimulate demand by increasing the reset rate. For the past four consecutive months, this rate has remained at approximately 11.5%.
Mark Palmer, Managing Director and Senior Research Analyst at Benchmark-StoneX, told Decrypt that STRC's intensified weakness is therefore a mechanistic outcome, a sign of the company's predicament. He said that the product's price naturally drifts lower when its reset rate is effectively below market levels.
Palmer stated: "This structure is functioning as designed. At current price levels, we believe STRC offers investors an attractive total return opportunity: on one hand, there's the current yield, and on the other, there's a built-in mechanism that should drive the price back towards par value."
He added that analysts at Benchmark-StoneX expect MicroStrategy to increase STRC's reset rate in early July, "and we expect this move to support a move back towards its par value."
As STRC fell, MicroStrategy's common stock also came under pressure. The company's stock fell as low as $109.36 on Thursday, hitting a four-month low. Over the past month, its stock price has accumulated a 32% decline, outpacing the pullback in the price of Bitcoin itself.
This trend deepened further last month. The Tysons Corner, Virginia-based company decided to sell 32 Bitcoins, raising $2.5 million. The company had previously signaled this move, aiming to send a message that it could fulfill its commitment to make distribution payments to preferred shareholders, one way or another.
Butterfill said: "Previously, the core market narrative was MicroStrategy's strategy of continuously accumulating Bitcoin by raising capital. Positioning a small sale to meet distribution obligations means this flow of funds is being reset and makes the overall strategy more complex, though this impact is likely temporary."
This sale also raised market questions: will this publicly listed company, which holds the most Bitcoin globally, liquidate further holdings in the future? On Wednesday, MicroStrategy responded in a post on X, stating that its holdings demonstrate confidence in the market for STRC over the coming years.
The company stated: "With our BTC holdings, we have 32 years of liability coverage." This statement is based on its approximately $55 billion in Bitcoin reserves compared to annual obligations and interest payments of about $1.7 billion.
Udi Wertheimer, CEO of Taproot Wizards, noted on X that if MicroStrategy were to truly attempt to use its Bitcoin reserves for financing or liquidation, the value it could ultimately realize would likely be far below the nominal figure as the market gradually absorbs those sales.
According to CoinGecko data, Bitcoin fell below $62,500 on Thursday, down over 5% on the day. At this price, MicroStrategy's holdings of 846,842 BTC are worth approximately $53 billion. Even so, analysts believe the current pressure remains growing pains rather than a fatal flaw.
Butterfill stated: "At this stage, I don't think this is an existential problem. It does indicate that MicroStrategy's funding model is becoming less efficient, and that investors are demanding higher returns to bear this risk."
