MSTR Stock Declines 8% Amid Concerns Over Dividend Sustainability
MSTR Plunges 8% As Peter Schiff Says Saylor's STRC Bitcoin Engine Is In A 'Death Spiral'
Image: Benzinga
Strategy Inc.'s preferred stock (STRC) fell below $98 as Peter Schiff warned of a 'death spiral' due to dwindling cash reserves. The company's USD reserve has decreased from 21 months to just 6.1 months, raising concerns about its ability to meet dividend obligations exceeding $1.7 billion annually.
- 01Strategy's cash reserve dropped from over two years to just 6.1 months, now totaling $871 million.
- 02Annual dividend obligations for Strategy's preferred stock series exceed $1.7 billion.
- 03STRC is designed to trade near its $100 par value, but it currently trades at $98, triggering a yield adjustment.
- 04Market-to-NAV ratio for MSTR is at 1.21 times, indicating potential shareholder value destruction if new shares are issued.
- 05Strategy sold Bitcoin for the first time since 2022 as Bitcoin trades below $70,000.
Advertisement
In-Article Ad
Strategy Inc. (NASDAQ:MSTR) saw its preferred stock (NASDAQ:STRC) drop below $98, with Peter Schiff asserting that a 'death spiral' has begun. The company's cash reserve, meant to cover preferred stock dividends, has plummeted from over 21 months to just 6.1 months, amounting to $871 million. This decline raises alarms as annual dividend obligations exceed $1.7 billion. The stock's current trading price below $100 means that the yield must be adjusted upwards, which could further erode investor confidence. Schiff noted that as investors grow concerned about MSTR's commitment to yield payments, the stock price may decline further, creating a negative feedback loop. Additionally, the market-to-NAV ratio stands at 1.21 times, indicating that issuing new shares could destroy shareholder value. Recently, Strategy sold Bitcoin for the first time since 2022, amidst a Bitcoin price dip below $70,000, further complicating its liquidity issues.
Advertisement
In-Article Ad
The decline in STRC could affect investor confidence and lead to potential liquidity issues for Strategy Inc.
Advertisement
In-Article Ad
Reader Poll
What do you think about the future of Strategy Inc.'s preferred stock?
Connecting to poll...
More about Strategy Inc.
Read the original article
Visit the source for the complete story.