Strategy raised the annualized dividend on its STRC preferred stock to 12% in late June, yet the security still trades well below its $100 par value. That gap has opened a public debate over whether the company should sell bitcoin to buy back its own shares.
Strategy's plan to fund preferred-stock buybacks with bitcoin sales has split market watchers, after the company raised STRC's annualized dividend to 12% with semi-monthly payouts on June 29. STRC trades in the mid-to-high $80s, with a 52-week range of roughly $71 to $100. The stock sits roughly 13% below its stated par value.
The framework behind the buybacks
The June 29 "Digital Credit Capital Framework" set out how the buybacks would work. Strategy lifted its USD Reserve to about $2.55 billion, which the company says covers roughly 17.4 months of combined preferred dividend and interest obligations. It also authorized a $1 billion repurchase program covering its four preferred securities, STRC, STRF, STRD and STRK.
To pay for those buybacks, the company approved a $1.25 billion bitcoin monetization program. Strategy's sale of more than 3,000 bitcoin then intensified the discussion on social media.
Where traders disagree
Supporters and skeptics read the same numbers differently. The account BTC Optioneer argued that buybacks can get the price back to $100 and restore investor confidence, drawing in arbitrage traders. The account Bitpaine countered that forced price targeting removes meaningful price discovery, and suggested a wider band closer to $90 to $110 would let the market set an effective yield faster.
Peter Schiff took a more fundamental view. According to Bitcoin News, Schiff wrote: "Wall Street refuses to put its money where its mouth is." He argued that if big banks believed Bitcoin would rise 12% per year, STRC would trade near $100 rather than under $87.
What the math implies
At current prices near $86, STRC's effective yield runs close to 13% to 14%. A $1 billion buyback would retire approximately $1.16 billion in stated preferred value, reducing future dividend obligations.
Source: Bitcoin News
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