STRC has returned to a hundred yuan multiple times, the key lies in how much Strategy is willing to pay.

Written by: Protos

Translated by: Chopper, Foresight News

STRC is a dividend stock issued by Strategy (formerly MicroStrategy), a Bitcoin reserve enterprise led by Michael Saylor, and the latest closing price has fallen to 80.84 dollars.

That number was supposed to be 100 dollars.

STRC price panel, source: Strategy official website

Saylor places significant importance on maintaining STRC at a trading price of 100 dollars, with only one week remaining until the dividend snapshot date, he hopes to pull the stock price back to the 100 dollars mark before then.

The company's filing with the U.S. Securities and Exchange Commission (SEC) clearly states: Strategy "aims to stabilize the trading price of STRC shares around the par value of 100 dollars per share."

But the reality is that the current stock price is approximately 20% below par value.

Complicating matters further, the company data panel shows another severe crisis: as of yesterday's Nasdaq close, the June monthly volume-weighted average price (VWAP) for STRC was 94.09 dollars, falling below the company-set red line of 95 dollars. According to internal rules, once this threshold is touched, the dividend increase must be at least double the regular standard.

Based on the internal dividend mechanism, if the June monthly volume-weighted average price ultimately closes below 95 dollars, the next STRC dividend increase cannot be less than 0.5%. Under normal circumstances, since listing, the dividend increase for each dividend registration cycle for STRC has only been 0.25%.

This means that if secondary market funds do not actively step in to raise the stock price, the current annualized dividend yield of 11.5% is likely to be raised to 12% in the next dividend registration cycle in mid-July. If the Strategy board wishes to adopt a more aggressive strategy, their rules allow them to grant a higher increase at their discretion.

Can a 12% high dividend drive the stock price back to 100 dollars?

Even if a 12% ultra-high dividend is expected to attract buying interest, the current stock price of around 80 dollars is still a significant gap from 100 dollars.

First, investors need to hold for a whole year to receive this anticipated 12% dividend, and the dividends will be split into 24 semi-monthly capital returns, with only 0.5% paid each period; secondly, the board may lower the dividend standard at any time within the year.

In addition, the STRC stock price itself still carries the risk of continued decline.

Ultimately, investing in STRC entirely relies on market expectations, with no guarantee of returns. The company’s board can modify or suspend the dividend policy at any time, and this so-called "standardized dividend mechanism" is not legally binding. The company's publicly disclosed documents repeatedly warn that cash dividends are not guaranteed, and there is a possibility of sudden reductions or direct suspension; at the same time, the company does not provide any bottom guarantee for the STRC secondary market price, and the current stock trend remains weak.

Four other viable methods to boost stock price recovery

In addition to significantly raising dividends, Strategy has four tools to restore market confidence, but the feasibility is low and the effects are limited.

First, the company directly buys back STRC stock in the secondary market.

Regulatory guidelines allow companies to buy back their own stocks on Nasdaq, but the company has never implemented buyback operations, nor has it expressed any intention of buyback. On the contrary, Strategy’s initial intention in issuing STRC was to sell stocks to raise funds and increase Bitcoin holdings, not to buy back and support the stock price.

Secondly, Strategy may announce a suspension of issuing STRC priced above 100 dollars.

Last November, Strategy's supplementary documents showed plans to continue issuing STRC in the range of 99 to 101 dollars, with the actual issuance price basically locked at 100.01 dollars. Continuous issuance dilutes the circulating supply, effectively setting a natural ceiling on the stock price; when the price approaches 100 dollars, speculative buying interest significantly weakens. If the company unexpectedly announces a suspension of dilution at around 100.01 dollars, this surprise measure may temporarily boost market sentiment.

Third, the company could reduce common stock holdings to continuously accumulate U.S. dollar cash, signaling to the market that it has long-term stable dividend capabilities.

In recent weeks, Strategy has already adopted this approach, selling MSTR common stock, adding several hundred million dollars in cash buffer, but the effect has been minimal. Currently, the company’s dollar reserves stand at only 1.4 billion dollars, a scale insufficient to convince STRC shareholders to hold with confidence.

Fourth, Strategy may announce a surprising benefit for STRC shareholders.

The board of listed companies has the right to distribute one-time special dividends or shareholder welfare benefits, creating positive surprises. For example, the company’s CEO Phong Le recently purchased 1 million dollars worth of STRC; although the amount is negligible compared to his annual salary, it still serves as a small positive signal. If the board introduces more creative shareholder welfare, it may reverse the current bearish market sentiment.

Historically, STRC has also rebounded defyingly and stabilized at 100 dollars. According to Protos reports from last October, the company then fully fulfilled its dividends, raising the dividend to 10.25%, and suspended sales of STRC through ATM issuance channels since July, with multiple positive factors resonating to push the stock price back to 100 dollars for the first time. Prior to the dividend registration date, many investors were willing to buy in at the 100 dollars price.

From historical trends, STRC is entirely capable of returning to 100 dollars; the only question is: how much cost is Strategy willing to incur to attract funds to buy in.