At a market cap of $5 billion, Lee suggested that STRC’s popularity among retail investors indicates that they “prefer low-volatility, high-yield digital credit.” The assessment comes as Strategy’s common stock (MSTR) price has plunged 56% over the past six months to $134.
Platforms common among retail investors have expanded access to STRC, which trades on the Nasdaq, including Robinhood, Kraken, and Webull. At 80% of STRC’s market cap, Lee indicated that retail investors hold $4 billion worth of the dividend-paying product.
On a notional basis, that’s still less than the value of common shares that Lee said retail investors hold. A 40% slice of Strategy’s $46.3 billion market cap is currently $18.5 billion.
The notion that Strategy’s common stock is losing preference among retail investors makes sense when viewed through a risk-adjusted lens, according to Mark Palmer, an equity research analyst at investment banking firm Benchmark-StoneX.
“The company’s common stock offers theoretically unbounded upside, but it is essentially a leveraged, non-yielding Bitcoin proxy and therefore better suited for sophisticated, risk-tolerant investors,” he told Decrypt. “STRC offers a predictable return through its high-yield, low-volatility, and significant Bitcoin overcollateralization that limits downside, and as such it maps better to how most retail investors are accustomed to thinking about income-generating assets.”
The investment bank’s managing director of equity research, Lance Vitzana, recently told Decrypt that STRC’s uptick in issuance followed Strategy’s annual conference in Las Vegas last month. He noted that STRC was marketed aggressively during the two-day confab.
So far this month, Strategy has raised more than $1.5 billion via the dividend-paying product, which is engineered to trade at near its $100 par value. That represents around 33% of the product’s market cap, including its multi-billion-dollar public offering.
When the preferred share trades above that threshold, Strategy issues more shares to grow its Bitcoin stockpile. If the product lingers below, then the firm has indicated that it will hike the dividend in an effort to increase demand and lift STRC back towards its target.
Even though institutional investors are allocating to STRC, Palmer said that group is unlikely to displace demand from individuals. That’s because institutions tend to prefer the relative liquidity of Strategy’s common equity and asymmetric risk-reward profile, he said.
“In that sense, STRC is carving out a distinct investor base rather than competing directly with Strategy’s common stock,” Palmer added. “Importantly, this dynamic strengthens Strategy’s ability to raise capital for bitcoin accumulation, as STRC effectively expands the company’s addressable investor base.”
