Summary
- Strategy’s preferred stock STRC fell well below par, prompting a suspension of its at-the-market (ATM) program), according to the report.
- The drop in STRC has effectively blocked one of Strategy’s key funding sources for Bitcoin purchases, the report said.
- Even so, TD Cowen maintained its buy rating on Strategy.
Forecast Trend Report by Period
Strategy’s preferred stock STRC has fallen well below its $100 par value, forcing a halt to the at-the-market, or ATM, issuance program the company had used to fund Bitcoin purchases.
The Block reported on June 18 that STRC fell as low as $82.50 intraday before closing at $88.59. It finished below $90 for a second straight session, its longest losing stretch since listing.
STRC is a floating-rate perpetual preferred stock that Strategy issued to raise money for Bitcoin purchases. It currently offers a dividend yield of about 12.9% and was designed to trade near its $100 par value.
When STRC traded at or above par, Strategy issued new shares through the ATM program and used the proceeds to buy Bitcoin. With the stock now trading far below par, that funding mechanism has been interrupted.
The Block said Strategy has suspended the STRC-based ATM program because the shares are trading below face value. In the market, the move is being viewed as effectively shutting off one of the company’s key funding sources for Bitcoin purchases.
STRC trading volume reached about 10.7 million shares on the day, roughly three times its typical daily average of 3.4 million to 3.5 million shares.
TD Cowen nonetheless maintained its buy rating on Strategy. Citing a recent investor meeting with Chief Financial Officer Andrew Kang, the firm said dividend payments, cash reserves, convertible debt management and even Bitcoin sales if needed are all part of a long-term strategy to maximize Bitcoin value per share.
Strategy’s common stock, MSTR, fell 4% to close at $112.53.
YM Lee
20min@bloomingbit.ioCrypto Chatterbox_ tlg@Bloomingbit_YMLEE
