Strategy (MSTR) Stock Drops as STRC Preferred Hits New Lows – Analyst Flags Serious Capital Risk

TLDR

• STRC closed at $88.59 on Thursday, hitting an intraday low of $82.50 — its longest stretch below the $100 par value since its July 2025 IPO
• Trading volume spiked to 10.7 million, well above the 3.4–3.5 million daily average
• Arca’s Jeff Dorman says Strategy may need to sell $3B–$4B in Bitcoin to restore STRC to par
• TD Cowen maintained a Buy on MSTR with a $400 price target, while MSTR closed down 4% at $112.53
• Strategy has paused STRC’s ATM program while the stock trades below par

Strategy’s preferred stock STRC closed at $88.59 on Thursday, marking its second consecutive close below $90 and the longest stretch it has traded under its $100 par value since debuting in July 2025.

Strategy Inc, MSTR

During Thursday’s session, STRC hit an intraday low of $82.50 before recovering slightly. The stock was originally designed to trade at par by offering a variable dividend — currently set at 12.9% and adjusted monthly.

Trading volume surged to approximately 10.7 million on Thursday, compared to a normal daily average of around 3.4 to 3.5 million. That makes it one of the highest-volume days on record for the preferred stock.

With STRC below par, Strategy has paused the stock’s ATM program. When STRC trades above $100, Strategy typically issues new stock to purchase Bitcoin.

MSTR common stock also had a rough day, closing down 4% at $112.53.

What Needs to Happen to Fix STRC

Arca Chief Investment Officer Jeff Dorman laid out the options bluntly on X, saying the “MSTR pickle continues.”

Dorman’s base case — which he puts at 70% probability — is that Strategy continues selling small amounts of MSTR stock each month at non-accretive levels. He says that gives STRC holders “a glimmer of hope” while keeping Bitcoin mostly intact, but warns MSTR stock “would get hammered.”

His second scenario, given a 25% chance, is the more drastic move: Strategy sells between $3 billion and $4 billion worth of Bitcoin. Dorman says this would “buy a ton of time” and be good for STRC, though bad for Bitcoin in the short term.

The third option — what Dorman calls the “nuclear” scenario at 5% probability — would involve Strategy halting payments on dividend-dependent preferred securities. That could result in preferred holders receiving just 30 to 40 cents on the dollar and would likely shut Strategy out of capital markets entirely. It would, however, eliminate what Dorman estimates is a $1.7 billion annual cash outlay.

TD Cowen Stays Bullish

Not everyone is hitting the panic button. TD Cowen maintained its Buy rating on MSTR on Thursday, keeping a $400 price target and also expressing support for Strategy’s suite of preferred stocks, including STRC.

The firm framed Strategy as moving beyond a simple leveraged Bitcoin proxy toward what it calls a “Bitcoin capital markets platform.”

TD Cowen analysts cited three investor meetings with CFO Andrew Kang, noting that near-term, the company may prioritize reserve rebuilding and preferred support over new Bitcoin purchases when market conditions are unfavorable.

Peter Schiff went further than most critics, warning on social media of potential lawsuits against Michael Saylor’s Strategy over STRC’s continued decline.

Dorman also questioned MSTR’s overall valuation, estimating the company holds roughly $35.2 billion in unencumbered Bitcoin collateral against a $40.4 billion equity market cap — placing MSTR at 1.15x mNAV. He says the stock “should trade at a discount to NAV now” and has further downside unless Bitcoin rallies quickly.

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