Strategy’s common stockholders are no strangers to volatility, but it’s a relatively new phenomenon for some of the people holding its flagship preferred equity.
When Emery Redenius, 44, heard about Stretch (STRC), the Bitcoin-buying firm’s largest dividend-paying product, the newly retired slot-machine technician told Decrypt that he bought it on day one, scooping up shares alongside its debut.
Since then, the Las Vegas resident has accumulated more than $400,000 worth of STRC and SATA, a similar preferred stock offered by asset manager and fellow Bitcoin treasury firm Strive. As Redenius settles into a new phase of life, he said he wouldn’t be surprised if he maintained his exposure for a long time.
“I have an income portfolio, so this was just a great addition to it,” he said, highlighting what he viewed as the tax-deferred nature of STRC’s semi-monthly distributions, where levies are delayed until shares are sold. “I’m gonna probably pay no tax on this investment forever.”
STRC fell as low as $82.53 on Tuesday, according to Yahoo Finance, hitting its lowest level since it debuted last year in July. Several times, the preferred stock has traded at or above its $100 par value, enabling the Bitcoin-buying firm to raise billions of dollars in proceeds through new share offerings.
Redenius is among many everyday investors who have allocated funds to the product that currently offers an 11.5% annual dividend, which Michael Saylor, Strategy’s co-founder and executive chairman, has likened to money market funds and FDIC-insured bank accounts.
To Saylor, STRC is a financial revolution, comparable to Apple’s iPhone moment. But while investors are drawn to the double-digit yields of an experimental asset class, some experts warn that many could be blindsided if the firm is ever forced to tighten its purse strings.
Decrypt has reached out to Strategy for comment.
While some savers maintain faith in Strategy’s vision for “digital credit,” others have grown anxious amid the preferred stock’s heightened volatility in recent weeks, tracking STRC closely as it lingers below the $100 threshold that it’s designed to trade around.
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A 40-year-old IT worker, who requested anonymity, told Decrypt that he feels misled after accumulating around $425,000 worth of STRC starting in May. The Californian’s position is roughly $42,000 underwater, yet he’s still holding, despite his shift from believer to cynic.
“I was always skeptical of Strategy,” he said. “But the community was so dogmatic about its stability that, for a brief time, I was tricked into thinking STRC would be different.”
The IT worker said he sold bonds to buy STRC and has since become glued to Strategy’s operations, particularly the company’s recent decision to heavily tap its cash stockpile to repurchase a portion of its debt at a discount, before attempting to steadily rebuild it.
“Traditional investors like me don’t like the instability that comes from having a small cash reserve,” he added. “It could force them to sell Bitcoin.”
‘Millions of households’
The IT worker’s regret highlights STRC’s inherent trade-off, and is emblematic of the structural friction that experts believe will inevitably test the resolve of other retail investors. (The investors quoted in this article provided documentation of their positions to Decrypt.)
“At some point, the pain is going to be too much,” Glenn Cameron, head of institutional at Onramp Bitcoin, a Bitcoin-native financial services and custody platform, told Decrypt, arguing that STRC is highly fragile and dependent on Bitcoin’s price.
Cameron fears that the investors he’s spoken to, including a nurse and a truck driver, don’t grasp STRC’s downside risk. He refused to make a hard prediction, but warned a sharp Bitcoin drawdown could leave them with steep losses and no income when they could need it most.
Although Saylor has described the product as attractive for the risk‑averse, Cameron noted that STRC has no insurance—unlike bank deposits—and is tied to a company that generates little cash and pays dividends that can be suspended indefinitely, with no obligation ever to make investors whole.
Redenius, however, hasn’t been swayed by price swings. He sees STRC’s dips as a buying opportunity, while using derivatives to shape his entry price and generate extra income.
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“That’s the problem with people buying it at $100—they freak out when it drops a little bit,” he said. “You bought it at perfection. You should’ve waited and bought it at a discount.”
Strategy references the risks in STRC’s prospectus, disclosing that the preferred stock’s value and liquidity are subject to significant market volatility, interest rate fluctuations, and the absence of an established trading market, alongside its junior standing to the company’s debt.
The divide underscores the product’s position in the market. For many, the double-digit yield serves as a compelling incentive, offering a way to capture the upside of Bitcoin’s institutional adoption through a familiar, brokerage-ready wrapper.
It has also allowed Strategy to accumulate Bitcoin in new ways, beyond taking on debt and issuing common stock. Since STRC’s debut, the firm has issued more than $10 billion worth of shares, accelerating its acquisition pace and lifting its holdings to 846,842 Bitcoin—about $53 billion worth, as of this writing.
Because STRC has saddled Strategy with recurring costs, the product’s sustainability has been questioned by analysts at times, leading the Bitcoin-buying firm to establish cash reserves to reassure investors that the company can continue to make semi-monthly payments.
Along those lines, Strategy sold 32 Bitcoin last month, a move intended to convey the company’s willingness to pare its holdings to manage STRC’s recurring costs. The sale was framed by the company as a disciplined capital management decision, but its symbolic weight triggered Strategy’s worst weekly performance since November 2022.
The Bitcoin-buying firm’s common shares changed hands on Thursday around $110, a nearly 34% decline over the past month, according to Yahoo Finance. Strategy’s stock price rocketed as high as $457 roughly 11 months ago, before Bitcoin’s plunge from all-time highs.
At a Bitcoin conference in April, Saylor noted that a significant number of everyday investors have already gained exposure to STRC, with retail buyers owning around 80% of the preferred stock.
“We estimate three million households right now are benefiting from STRC,” he said. “Our vision is to power millions and then tens of millions and then hundreds of millions of households with a high-yield savings account. It’s a straightforward thing.”
