#STRCHitsAllTimeLow

Strategy's preferred stock experiment is entering its most difficult phase yet. STRC, the Variable Rate Series A Perpetual Stretch Preferred Stock that was designed to trade close to its $100 par value while delivering stable income, has suffered an unprecedented decline. After closing at $74.57 on June 26 and indicating further weakness in pre-market trading near $71.90, the security is now trading at more than a 25% discount to its intended value, raising serious questions about investor confidence and the sustainability of its financing model.

The selloff has accelerated over the past two weeks. STRC traded around $89 on June 17 before sliding below $83 during June 19 trading. Although it briefly recovered to close at $88.59 on June 20 with more than 10 million shares changing hands, selling pressure quickly returned. By June 26, the preferred stock had fallen through the $75 level as another 6.28 million shares traded, marking its weakest performance since launch.

The primary driver behind this collapse is the ongoing weakness in Bitcoin. With BTC trading near $60,000, more than 50% below its October 2025 record high of approximately $126,000, investor confidence in Strategy's highly leveraged Bitcoin-focused business model has deteriorated significantly.

For the first time in the company's history, Strategy's enterprise multiple-to-net-asset-value (mNAV) has fallen below 1. This means the market is valuing the entire company at less than the current value of the Bitcoin it owns. Such a discount reflects growing concerns about leverage, future profitability, financing costs, and long-term capital allocation.

At the same time, Strategy is carrying more than $13 billion in unrealized Bitcoin losses. The magnitude of these paper losses exceeds the entire market capitalization of several major cryptocurrencies combined, highlighting just how closely the company's financial position is tied to Bitcoin's performance.

Perhaps the biggest concern is what this means for Strategy's funding strategy. STRC has been a critical source of capital, but with shares trading well below $99, the company has effectively paused its at-the-market issuance program. Selling new preferred shares near $74 while continuing to pay annual dividends of $11.50 per share would push the effective financing cost above 15%, making new issuance economically unattractive despite the official dividend rate remaining at 11.5%.

The pressure has already forced Strategy into an action many investors once believed impossible. In late May, the company sold 32 Bitcoin for approximately $2.5 million to help fund preferred stock dividend obligations. It marked the first Bitcoin sale in Strategy's history, ending years of maintaining an accumulation-only philosophy.

Competition is also increasing. Asset manager Strive has introduced SATA, a competing preferred product that offers daily dividend payments, creating additional pressure as income-focused investors compare yield, liquidity, and overall risk.

Although STRC now offers an effective yield above 15% because of its depressed market price, investors must recognize that the higher yield reflects significantly higher risk. Dividends are not guaranteed, the preferred shares have no maturity date, and another major decline in Bitcoin could easily push STRC toward $60 or even lower.

While some analysts continue to maintain bullish long-term targets for Strategy's common stock, the preferred shares are sending a far more cautious message. The market is no longer focused solely on attractive yields—it is pricing structural risk, financing uncertainty, and Bitcoin volatility. For investors, the key question is no longer how high the yield has become, but whether that yield is sufficient compensation for the growing risks embedded within Strategy's capital structure.

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