Strategy's preferred stock STRC hit $73.62 on the Nasdaq today, a 26.4% collapse from the $100 price it was designed to defend. The slide accelerated after a law firm announced it would solicit holders for a potential class action over allegations that Strategy issued materially misleading information to investors. No regulatory probe has been publicly disclosed, and the class action remains in solicitation phase, not yet filed.
The stock's failure to hold its peg marks a critical test of Strategy's core strategy. Since 2020, the company has spent $64.1 billion buying Bitcoin while issuing STRC and other securities to fund the purchases. That Bitcoin is now worth $50.5 billion, creating a $13.6 billion unrealized loss according to Protos. Operating costs alone have exceeded $1 billion over the period.
The mechanics are unraveling
Strategy created STRC as a dividend-paying instrument meant to trade near par by adjusting a variable dividend rate. That rate now stands at 11.5% annually, and the company has raised it seven times since launch. Even so, market buyers are unwilling to pay $100 for shares that offer no redemption guarantee and no backing requirement.
Unlike a bank account or money market fund, STRC holders have no FDIC or SIPC insurance. Strategy's own filings acknowledge it is not required to hold assets to back the shares. Holders cannot redeem STRC to Strategy at $100; they must find another buyer willing to pay that price. At today's prices, those buyers have priced in the risk that STRC will trade lower still.
With roughly 105 million shares outstanding, the $26-per-share discount below par translates to a $2.8 billion market-cap hole relative to the stated $100 value. The company lost over $700 million in market cap in a single session, according to Protos.
Why confidence is collapsing
Bitcoin and Strategy's common stock, MSTR, both hit 52-week lows alongside STRC. The convergence reflects a single underlying bet: that Michael Saylor's leverage-fueled Bitcoin accumulation strategy will ultimately work. As that confidence erodes, the mathematics of the dividend adjustment mechanism break down. Each percentage point added to the dividend increases the perpetual obligation owed to shareholders, but cannot force buyers back to par if they believe losses will deepen.
Protos reported that social-media commentary has turned hostile, with observers comparing STRC to the spectacularly failed LUNA token and questioning whether the company's messaging on television and online overstated STRC's safety profile. Complaints emerged about the sustainability of the dividend and the company's ability to restore value. No public enforcement action by the SEC has been disclosed, but the reputational damage from the class-action solicitation alone is substantial. A proposed class action received over 300,000 views in a short window.