The strategy’s perennial favorite security, Stretch (STRC), fell as low as $97.11 on Thursday as bitcoin dropped to the $73,000 mark.
STRC tends to face selling pressure during bitcoin pullbacks and in the days immediately following its ex-dividend date, as seen on November 20th and February 5th. The ex-dividend effect typically results in a price adjustment that reflects the value of the dividend, while periods of bitcoin weakness can reduce investor appetite for Strategy-related securities. Together, these factors have historically created short-term pressure on STRC’s market price.
The Company has structured STRC to trade close to its par value of $100, as maintaining this level allows Strategy to continue to issue shares through its at-the-market (ATM) program and raise additional capital efficiently.
Strategy recently repurchased $1.5 billion of its 0% convertible senior notes due 2029, reducing its overall debt load. However, the buyback was financed with cash from the company’s US dollar reserve. The strategy’s cash balance fell from approximately $2.25 billion to $871 million as a result.
Based on the company’s current annual preferred dividend obligations of about $1.7 billion, the remaining cash reserve now provides only about six months of coverage, but was originally deployed to cover the dividend obligations for 24 months.
Executive Chair 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 Senior Analyst James Van Straten. These include selling bitcoin, issuing additional MSTR equity when the stock trades above a 1.22x multiple to net asset value (NAV), or raising capital through STRC issuance. Saylor stressed that management evaluates these decisions through the lens of bitcoin per share. share and prioritizes actions that are beneficial for the shareholders.
Rival bitcoin tax firm Strive Asset Management (ASST) has taken a different approach. The company recently announced daily dividend payments for its perennial favorite, SATA. For the past two weeks, SATA has been firmly anchored around its $100 par value, while offering a roughly 13% yield even during bitcoin’s decline.
Although the daily dividend mechanism has not yet been implemented, investors may see it as a stabilizing feature that helps keep securities trading close to par.
Strive has also eliminated all debt inherited from the acquisition of Semler Scientific, a balance sheet strategy that mirrors the direction Strategy appears to be taking through its recent debt buybacks.
The market performance gap between the two companies has been remarkable. Over the past three months, Strive shares are up approximately 110%, compared to a 12% increase in MSTR and an 8% increase in bitcoin. This divergence suggests that investors may be rewarding Strive’s cleaner balance sheet and higher-yielding, preferred structure.
