Woofun AI reports that Strategy, formerly known as MicroStrategy and led by Michael Saylor, faces a critical juncture as its dividend-paying stock STRC trades approximately 20% below its $100 face value. The latest closing price has settled around $80, creating a significant gap that the company aims to bridge before the upcoming dividend payment date. With only one week remaining in the current cycle, the pressure to push the stock price back above the $100 threshold is intensifying. In its filing with the SEC, Strategy explicitly stated its intention to maintain the trading price of STRC around its $100 face value, a target that now appears increasingly difficult to achieve given current market dynamics.

Data compiled by Woofun AI shows that as of Nasdaq's closing yesterday, the weighted average trading price of STRC in June was $94.09, falling short of the company's internal target of $95. This specific metric triggers a mandatory adjustment mechanism under the company's internal rules. If the June VWAP closes below $95, the increase in the dividend amount must be at least twice the usual rate. Consequently, if the threshold is breached, the next dividend increase for STRC must be no less than 0.5%, compared to the standard rate of 0.25%. This structural adjustment implies that the current annual dividend yield of 11.5% is likely to rise to 12% during the next dividend registration period scheduled for mid-July. While the board of directors retains the discretion to approve an even larger increase, the baseline mathematical outcome points toward a higher yield requirement to compensate for the price depreciation.

Despite the potential for a 12% dividend yield to attract buyers, the economic reality for investors remains complex. Investors would have to hold the stock for an entire year to receive the expected dividend, which would be distributed in 24 semi-annual payments of just 0.5% each.

Furthermore, the board of directors could reduce the dividend amount at any time throughout the year, introducing significant uncertainty. There is also a persistent risk that the price of STRC could continue to decline, eroding the total return potential. The company's disclosure documents note that cash dividends are not guaranteed and may be reduced or discontinued suddenly.

Additionally, the company does not provide any assurance regarding the price of STRC in the secondary market, leaving holders exposed to volatility without a safety net.

Beyond increasing the dividend, Strategy has four other options to restore market confidence, though their likelihood of being implemented is relatively low. The first option involves a buyback of STRC shares in the secondary market. While this is allowed by regulations, it has never been carried out, and there is no current intention to do so. The initial purpose of issuing STRC was to raise funds for increasing Bitcoin holdings, not for buybacks to support the stock price. The second option is the suspension of issuing STRC shares at prices above $100. Supplementary documents from last November indicated plans to continue issuing new shares in the range of $99-$101, but the actual issuance price was set at $100.01. Continuous additional issuances dilute the outstanding shares and suppress bullish sentiment; suspending these issuances might briefly boost market sentiment, but the dilution effect has already taken hold.

The third strategy involves selling MSTR ordinary shares to accumulate cash in US dollars. In recent weeks, the company has sold MSTR ordinary shares to generate several hundred million dollars in cash reserves, but this has had little effect on the STRC valuation. Currently, the company's cash reserves amount to only $1.4 billion, which is not sufficient to convince shareholders to remain invested in the face of a 20% discount. The fourth option is announcing unexpected benefits, such as the board of directors distributing one-time special dividends. CEO Phong Le's purchase of $1 million worth of STRC shares this week is a small positive sign, yet it represents a minimal capital injection relative to the market cap. Historically, STRC's price has sometimes reversed trend and increased despite unfavorable conditions. According to a report by Protos in October last year, the company fully fulfilled its dividend obligations, increased the dividend rate to 10.25%, and stopped selling STRC through ATM-based secondary offering channels starting in July. These actions helped push the stock price back above $100 for the first time in that cycle. Before the dividend registration date for that period, many investors were willing to buy STRC shares at $100 each, driven by the expectation of yield stability. STRC has the potential to return to the $100 level, but it depends on how much Strategy is willing to invest to attract investors back into the market. The current trajectory suggests that without aggressive intervention, the gap between market price and par value may widen further before any recovery occurs.