Michael Saylor, founder and executive chairman of Strategy Inc., compared a sharp equity sell-off and bitcoin's retreat with the company's STRC preferred stock trading near par on Nov. 5. His assessment followed the company's shift to daily dividends and the shares' return to their $100 benchmark.
Equity and Bitcoin Losses
The Nasdaq Composite fell 5.52%, closing at 24,315, down 1,421.52 points from its previous close of 25,736.52. In a post on X, Saylor said the S&P 500 dropped 4.4% and bitcoin fell about 5%, while STRC closed at $99.56, just 44 cents below par.
Saylor described the day as a "4σ day for equities," a decline he said is seen roughly once every 19 months. Sigma denotes standard deviation, a measure of market volatility that describes how widely daily returns vary around their average. A four-sigma decline describes a daily return four standard deviations below its historical average; how frequently such moves occur depends on the return distribution and historical period used.
Bitcoin had fallen below $77,000 earlier Thursday as technology shares weakened, reversing its post-election recovery. It dropped from Wednesday's $81,105 peak to $76,059, a decline of approximately 6.22%.
STRC Trades Near Par After Daily Dividend Shift
STRC's $99.56 finish placed it 0.44% below its $100 stated amount. The shares had reached $100 on Nov. 4, their first return to that level since May, following months of repurchases and a change in dividend payments.
Strategy's variable-rate preferred stock carries a 12% annualized dividend rate based on the $100 stated amount. The company adjusts the rate monthly to encourage trading around par. Payments are not guaranteed, and the preferred shares are not collateralized by its bitcoin holdings.
Daily dividend accrual began Nov. 1, with the first cash distributions starting Nov. 2 following shareholder approval on Oct. 28. Shareholders accrue dividends on weekends and holidays, while payments generally follow on business days. The change replaced STRC's twice-monthly distribution schedule.
Trading above $100 could allow Strategy to sell additional STRC shares through its at-the-market offering program, potentially raising capital for further bitcoin purchases. The company has used repurchases to support the stock below that threshold, with year-to-date buybacks reaching approximately $2.04 billion, including unsettled transactions, by Oct. 25. New issuance and bitcoin acquisitions would depend on management decisions and market conditions.
Strategy's Financials and Saylor's Bullish View
The comparison followed Strategy's record third-quarter operating income of $20.91 billion, announced Oct. 29 and driven by digital asset valuation gains. Net income totaled $19.53 billion, while revenue declined 3% to $125.4 million. U.S. dollar assets stood at $5.07 billion as of Oct. 25, providing an estimated 3.4 years of coverage for preferred dividends and interest obligations at the time.
Saylor had also predicted that a new bitcoin bull market was beginning in Strategy's Oct. 29 earnings announcement. He cited growing adoption by banks, renewed institutional demand, and bitcoin trading 21% above its 200-week moving average.
