Strategy's preferred stock STRC hit $73.62 on the Nasdaq today, trading 26.4% below the $100 price it was designed to hold. The collapse pulled both Bitcoin and Strategy's common stock to 52-week lows as a law firm announced it is soliciting investors for a potential class action alleging the company issued "materially misleading business information."

The solicitation is not a filed complaint or regulatory probe. The SEC has not announced any public action against Strategy. Still, the announcement accelerated selling pressure that has been building for weeks. On social media, investors flagged Strategy's near-$14 billion unrealized loss on its Bitcoin holdings. A proposed class action post earned over 300,000 views.

The dividend math breaks down

Strategy launched STRC at $100 per share with a variable dividend designed to keep the stock near par. The company has raised the dividend rate seven times since launch and now pays 11.5% annually. That mechanism has failed. With roughly 105 million STRC shares outstanding, today's low valued them at $7.7 billion, versus a notional $10.5 billion target. The gap is nearly $2.8 billion, and Strategy lost over $700 million in market cap overnight.

The structure offers no redemption right: holders cannot sell STRC back to the company at $100. They must find a buyer in the open market. Today those buyers were bidding lower than yesterday.

What STRC holders actually own

Strategy's own filings state the company is not required to hold any assets to back STRC. Unlike a money market account or bank account, STRC carries no FDIC or SIPC insurance. Marketing materials have likened STRC to a high-yield savings vehicle, but the legal structure differs fundamentally. STRC is a perpetual dividend obligation tied to a company whose largest asset is underwater.

The Bitcoin problem

Strategy spent $64.1 billion to accumulate Bitcoin that is now worth $50.5 billion. The company's unrealized loss stands at $13.6 billion. Over five years and more than $1 billion in operating expenses, Strategy has lost $13.6 billion betting on Bitcoin as a treasury asset. The loss is expanding, not shrinking, as Bitcoin has traded sideways and Strategy's capital structure has grown more exposed to volatility.

Every STRC share sold near $100 created a perpetual dividend obligation. Strategy cannot unwind that promise if Bitcoin continues to fall.