Strategy Inc.’s STRC preferred stock dropped below its par value for the first time on Wednesday, hitting a record low that effectively shuts down the company’s main pipeline for raising cash to buy bitcoin. The slide below par means Strategy can no longer sell new STRC shares at a premium through its at-the-market offering program — a key source of the billions it has plowed into BTC over the past two years.
How the sale program works
Strategy has been issuing STRC preferred shares at prices above the $100 par value, pocketing the difference to fund bitcoin purchases. As long as the market price stayed above par, the company could keep tapping that well. But with STRC now trading below $100, any new issuance would mean selling at a discount — a move that would dilute existing holders without generating the premium that made the strategy work. The exchange-traded preferred shares closed at $97.42 on Wednesday, according to data from the New York Stock Exchange.
Dividends force a first: Strategy sells bitcoin
The timing couldn’t be worse. STRC carries a mandatory 8% cumulative dividend, and this month those payments came due. To cover the cash obligation, Strategy sold a portion of its bitcoin holdings for the first time in the company’s history — an event that rattled investors who had come to view the firm as a pure BTC accumulation vehicle. The sale amounted to roughly 1,200 BTC, according to a regulatory filing, raising about $84 million at current prices. That’s a small fraction of Strategy’s total 210,000 BTC hoard, but the symbolic weight is heavy.
What’s next for Strategy’s funding machine
Without the STRC ATM program, Strategy will have to lean on its remaining capital-raising tools: convertible notes, common stock sales, or debt. None of those carry the same favorable terms that made STRC so attractive. The company has not yet announced a replacement funding mechanism. Its next quarterly dividend payment on STRC is due in September, and if the stock stays below par, Strategy will have to either sell more bitcoin or find another source of cash to make the payout. That question hangs over the stock as investors wait for the company’s next move.
