MicroStrategy's preferred stock, STRC, has fallen below its intended $100 level, trading in the high $80s after dipping to the low $80s. The 15% drop in two weeks raises questions about the company's ability to raise capital for Bitcoin purchases through such securities.
Designed with help from ChatGPT
CEO Michael Saylor said he used AI — specifically ChatGPT — to design the STRC preferred stock. The security is formally named Strategy's Variable Rate Series A Perpetual Stretch Preferred Stock. Strategy can adjust the dividend rate monthly, a feature meant to help support the $100 trading target. So far, that flexibility hasn't prevented the slide.
Concerns over capital costs
The drop matters because MicroStrategy has relied on equity and convertible debt to fund Bitcoin purchases. If STRC keeps falling, the company may need to raise the dividend, increasing its capital costs. That could lead to common stock dilution or a reduction in Bitcoin buying. There's no confirmed sign that MicroStrategy will be forced to sell Bitcoin, but the pressure is mounting.
Critics mock 'AI-designed' security
Critics are publicly mocking the security as an 'AI-designed' product that is breaking under market pressure. The irony isn't lost on observers: a security meant to attract yield-seeking capital is instead losing value quickly.
The next concrete test is whether Strategy will adjust the dividend rate in the coming weeks to stabilize STRC. If it doesn't work, the company may have to reconsider its capital-raising playbook — and that could slow the pace of Bitcoin accumulation.
