Strategy Holds STRC Dividend at 12% Despite Shares Below Par
Quick Look
- Strategy announced its August STRC preferred shares dividend will remain at 12%, despite shares trading below their $100 par value.
- The company reported a significant Q2 net loss due to Bitcoin holdings but aims for shares to reach par and has built a $3.75 billion cash reserve for payouts.
AI-generated summary
Why It Matters
Strategy's preferred STRC shares traded below their $100 par value in July, following a poor stock performance in June and a dividend hike to 12% at the start of July. The company reported an $8.22 billion Q2 net loss primarily due to unrealized losses on its Bitcoin holdings.
While Strategy’s preferred STRC shares ended July well below their $100 par value, investors were told that their August dividend will not increase, holding at 12%.
Executive chairman Michael Saylor delivered the news in a tweet on Saturday, continuing to pitch STRC as a way to “stretch your income.” August will be the second month that the dividend will be paid semi-monthly after shareholders approved that change in June.
STRC shares closed at $89.46 on Friday, clocking a 5.42% price increase for the month which began with a dividend hike — 50 basis points to 12% — after a poor stock performance in June. The volume on the Nasdaq-traded shares on Friday were about two-thirds of their daily average.
STRC shares continued to trade significantly below their $100 par value in July.
On Friday, Strategy CEO Phong Le reiterated that management’s “corporate objective is for STRC to trade at $99-$100 over time,” without elaborating when investors might expect that to transpire.
Building cash reserve to make preferred payouts
Saylor, however, did take to social media on Sunday to dangle the possibility that the company will be making an announcement of a change in its Bitcoin treasury holdings. “Bitcoin Drive engaged,” read his X post, following a familiar pattern of posting a chart of Strategy’s BTC buys from Saylortracker.com to start off the week.
Last week, Strategy reported an $8.22 billion second-quarter net loss, driven primarily by an $8.32 billion unrealized loss on its Bitcoin (BTC) holdings as the cryptocurrency’s price declined during the quarter.
The Bitcoin treasury company said it has built a $3.75 billion cash reserve to support preferred stock payouts following the launch of its BTC monetization program.
Strategy also said it has built a $3.75 billion U.S. dollar reserve, enough to cover more than two years of preferred dividend payments and interest obligations. The company recently repurchased $25 million of its STRC preferred shares at a discount to par and said it intends to continue buying the securities while they trade below $100.
What to Watch
AI outlook — possibilities, not facts
Strategy intends to continue repurchasing STRC preferred shares.
Very likely · Within months
Open Questions
- When does management expect STRC to trade at $99-$100?
- What specific change will be announced regarding Bitcoin treasury holdings?
