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STRC Price Stabilization Mechanism Fails; Mstr Stock Trades 25% Below $100 Target

GateNews
Stocks
According to Farside Investors, on June 27, Microstrategy's perpetual preferred stock STRC's price stabilization mechanism has largely broken down. STRC was issued at $100 and designed with mechanisms to push its price toward that target: higher dividends if the stock fell below $100, and lower dividends if it rose above. However, the mechanism relies on the company's discretionary dividend decisions rather than automatic stabilization. STRC currently trades at approximately $75, about 25% below its $100 target, and the company has not responded by raising dividends. Farside Investors noted that if the market expects Microstrategy to eventually reduce the dividend rate toward the SOFR rate (currently around 3.6%), STRC should trade near $55. The analysis suggests the company's most likely near-term option is to maintain the current 11.5% dividend rate while allowing the discount to persist, but a more permanent solution would likely involve STRC buybacks.
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