Schiff: Strategy’s STRC Target Harms MSTR Shareholders

On July 31, Peter Schiff posted on X criticizing Strategy Inc.’s plan to keep its Nasdaq-listed preferred share STRC trading near $100. The post came after Strategy’s second-quarter earnings release and a roughly 7% drop in MSTR common stock.

Schiff wrote that the company’s stated objective to support STRC creates a conflict between preferred investors and holders of the common shares. He wrote: “Bitcoin is breaking down today, with $MSTR leading the way, down 7% following Saylor’s morning X post that Strategy’s ‘primary corporate objective’ isn’t to maximize shareholder value but ‘for $STRC to trade at $99–$100 over time.’ In other words, MSTR shareholders are screwed.”

STRC, marketed as Stretch, is a perpetual preferred share listed on Nasdaq. It pays a 12% annual cash dividend in semi-monthly installments. The dividend rate is adjusted monthly with the stated aim of encouraging STRC to trade near its $100 par value and reducing price swings. Strategy describes the preferred structure as an additional financing channel for bitcoin purchases and says it requires management to balance dividend obligations, liquidity reserves, preferred pricing and common-share performance.

To support the preferred-stock program and overall liquidity, Strategy increased its dollar reserve to about $3.75 billion and repurchased 288,930 STRC shares for roughly $25 million. The company’s digital-credit capital framework authorizes up to $1 billion for digital-credit securities repurchases and up to $1 billion that could be used for MSTR share repurchases. Management also outlined conditions under which bitcoin sales could occur as part of its liquidity planning and completed a $216 million bitcoin sale earlier this year.

Views among investors differ. Schiff has argued that preferred securities and capital raises can dilute common equity and shift benefits toward creditors and preferred investors. Other investors pointed to the bitcoin sale and a recovery in STRC pricing as signs of reduced financing risk and improving confidence in the company’s capital structure.

Strategy will balance future bitcoin purchases, preferred-dividend commitments and potential repurchase programs while MSTR remains under market pressure. Any further bitcoin sales, reserve changes or repurchase activity could affect STRC pricing and outcomes for MSTR common shareholders.