STRC優先股為何難以重返100美元？

Original author: @100y_eth

Original compilation: AididiaoJP, Foresight News

Under the current situation, there is no reason for STRC to return to $100.

The mechanism originally designed to keep STRC trading near $100 is as follows: If the STRC price falls below $100, the dividend yield will increase due to the price drop, and Strategy may also raise the nominal dividend rate to above 11.5%. Since Strategy has the right to buy MSTR at $101 per share, price increases above this level are suppressed. If Strategy goes bankrupt, STRC holders have a claim of $100 per share plus accumulated unpaid dividends. For STRC to return to $100, the above mechanism needs to function properly.

Dividend Rate Adjustment Cannot Be a Fundamental Solution

Firstly, raising the dividend rate is unlikely to be effective for two reasons. A higher dividend rate would become a financial burden for Strategy, potentially worsening its financial condition. From an investor's perspective, offering a high dividend rate in an unfavorable environment could also be a negative psychological factor.

The adjustment and payment of dividend rates are not obligations of STRC but depend on board decisions, thus creating significant uncertainty from an investor's perspective.

Since STRC pays dividends based on a fixed amount per share rather than on a proportional basis, it is intended to be a product where dividend investors don't need to worry too much about the principal. Nevertheless, there remains high uncertainty about whether Strategy can continue paying dividends to STRC investors at the current level.

Of course, Strategy currently has enough USD reserves to cover bond interest and preferred stock dividends for approximately 9.8 months; if it sells its Bitcoin holdings, this could be extended to about 30 years. However, this does not completely resolve the uncertainty surrounding dividends.

USD reserves covering only 9.8 months is far from a long-term solution. To extend this period with USD reserves, Strategy would need to continue issuing MSTR through ATM offerings. At the current mNAV level, this would inevitably dilute book value per share, making it absolutely unsustainable for Strategy.

Even if USD reserves are exhausted, selling Bitcoin to prolong the lifespan of Strategy and STRC fundamentally contradicts the company's purpose and nature. It would diminish the appeal of STRC and MSTR as investment products and accelerate a negative feedback loop.

Unless a Redemption Occurs, the Claim of $100 Per Share is Meaningless

If STRC's price is guided solely through dividend rate adjustments, the figure of $100 holds no practical significance. The fundamental reason STRC can be guided to trade near $100 is that, in the event of Strategy's bankruptcy, STRC has a claim of $100 per share plus accumulated unpaid dividends on the remaining assets.

Simply put, STRC currently trading at $75 appears to be sold at a massive 25% discount to its normal $100 face value. But is that really the case?

The key point is that STRC is not a bond; it's a preferred stock. Bonds have maturity dates. If STRC were a bond, investors would receive $100 per share at maturity, and a discount of this magnitude would likely not occur.

Unless Strategy independently announces a buyback of STRC, the only way for STRC investors to recoup their principal is through Strategy's insolvency.

Two issues arise here. Contrary to the prevailing view in the community, Strategy is not easily bankrupted. The company's net leverage ratio is only 11%, and its amplification factor (the ratio of bonds and preferred stock to Bitcoin reserves) is merely 44%. For the company to truly go bankrupt, the leveraged positions from its bonds would have to collapse. This is difficult to achieve unless Bitcoin's price falls to about 11% of its current level (around $6,600). Even considering price drops from sell-offs, this is unlikely unless Bitcoin approaches roughly $10,000.

Even if bankruptcy does occur, there is still a problem. If Strategy goes bankrupt, it means a mere 11% leveraged position has already imploded. In such a dire scenario, preferred stock investors, including STRC holders (whose claims are subordinate to bondholders), would likely struggle to fully recover the remaining assets.

In other words, for STRC investors to get $100 per share, two conditions must be met simultaneously: 1) Strategy must go bankrupt; and (2) if the bankruptcy scenario actually occurs, they are unlikely to receive the full $100.

STRC Has No Reason to Trade Near $100

Strategy sets STRC's dividend rate at 11.50% based on the $100 price. But the price of STRC is determined by the market. The claim on residual assets of $100 per share seems insignificant in a worst-case scenario, and the long-term sustainability of dividend rate adjustments and payments is also questionable.

STRC is currently trading around $75. At this price, the effective annualized dividend yield reaches 15.3%. This means investors are demanding an additional yield of about 3.8% over the original 11.5% dividend rate due to factors like bankruptcy risk and uncertainty regarding dividend payments.

If investors believe a 20% dividend yield is reasonable given STRC's risk profile, STRC could trade at $57.5. Since the fair price depends on market uncertainty and investor psychology, no one can know exactly where it should be.

Under the current situation, there is no reason for STRC to trade near $100; its price will converge towards the market price assigned by investors.