Strategy Stock (MSTR) Drops 3% as $635M STRC Buyback Divers Cash From Bitcoin

Strategy (MSTR) spent $635.2 million buying back its preferred stock, known as STRC. MSTR stock fell around 3% in pre-market trading following the news. Investors pushed MSTR shares lower because the firm spent cash defending STRC instead of putting those funds directly into Bitcoin. Spending large amounts of money on preferred stock buybacks limits Strategy’s ability to stack cheap Bitcoin, which hurts main share value.

Preferred stock acts like a hybrid between a bond and a share, and it has a baseline target value set at $100. Right now, STRC trades near $97.34. Strategy set up a $1 billion fund to buy back these shares, which helped push the price up from a low of $71.

Even with this spending, STRC struggles to stay at $100. In its latest move, Strategy spent $151.8 million to buy STRC shares at an average price of $97.48. When a company buys back its own stock, it reduces supply to push prices higher. However, STRC remains stuck below its target level.

Strive’s 13% Payout Gives SATA a Clear Edge

Competitor token SATA has created extra pressure on STRC. Issued by Strive, SATA pays a 13% annual dividend rate with daily cash payouts. In contrast, Strategy pays a 12% annual rate on STRC with payouts twice a month. Since SATA pays a higher yield, investors prefer it over STRC.

As a result, SATA keeps its price right at the $100 target level. This strong price allows Strive to sell more shares and use the cash to buy Bitcoin. The impact shows up clearly in main stock prices as well. Strive stock jumped 60% this year, while Strategy stock fell 15%.

Strategy Buys More Bitcoin

At the same time, Strategy resumed buying Bitcoin after a two-month pause. The firm bought 4,603 Bitcoins for $369.7 million at an average price near $80,000. This move brought its total Bitcoin stash to 845,050 Bitcoins, worth about $65.9 billion.

For context, Strategy stock trades as a direct bet on Bitcoin. When Strategy spends cash on STRC buybacks or new Bitcoin, it uses its funds to protect share value. If STRC stays below $100, Strategy finds it harder to raise cheap money for future Bitcoin deals. This dynamic directly impacts main Strategy stock, as lower preferred share prices make corporate growth more costly.

Is Strategy Stock a Good Buy?

According to TipRanks data, Strategy (MSTR) has a Strong Buy consensus rating from 13 analysts. Of them, 12 rate it a Buy and one suggests a Hold. MSTR stock has an average 12-month price target of $253.17, implying a 90.4% upside. (See MSTR stock forecast)