“They suspect that Michael Saylor has painted himself into a corner, and that his tablets of commandments may crumble,” he said. “I reckon that most [STRC] buyers did not sign up for a 25% drawdown. They came for yield.”
The company’s stock fell as low as $82.33 before momentarily turning positive on the day. At $85.80 apiece, the company’s shares had ticked up roughly 0.5% on Friday.
At Bitcoin's recent price, Strategy’s stockpile of 847,363 BTC was worth close to $51 billion, or around $13.1 billion underwater.
Although STRC currently offers an 11.5% annual dividend, the implied yield becomes higher for investors as it drifts further away from its $100 par value. At its current level, investors are essentially demanding more than 15% returns to gain exposure to the product.
“Because the structure is unsustainable and requires the perpetual monetization of the common equity, which is trading near par,” he added, “it will continue to trade at a discount unless Strategy hikes the yield on STRC to the appropriate range, which is 15-20% in my opinion.”
