Strategy (MSTR.US) has seen its perpetual preferred stock, STRC (Stretch), climb back to as high as $99 after a brutal selloff, putting it just a stone's throw from its $100 par value. However, the biggest buyer propping up this rebound has been the company itself. Strategy launched this product with the intent of expanding its bitcoin financing model beyond the volatile common stock.

Getting STRC back to the $100 par value is crucial for Chairman Michael Saylor to prove this "digital credit" product can serve as a durable capital source, not just something that works when market enthusiasm for both Strategy and bitcoin runs hot. That logic faced a major test in June, when Strategy sold a small amount of bitcoin, breaking Saylor's long-held "never sell bitcoin" stance. The subsequent selloff drove the perpetual security down to nearly $70, undermining the narrative that STRC offered a more stable way to participate in Saylor's leveraged bitcoin accumulation strategy. After weeks of substantial buybacks, Stretch has now rebounded to a high of $99.

Massive Self-Buying Scale

Data shows that between July 20 and September 13, Strategy repurchased approximately 9.96 million STRC shares, spending around $950 million. This accounted for roughly 18% of total STRC trading volume during that period. In the most recently reported week, Strategy's buybacks represented nearly 28% of total trading volume. Jay Hatfield, CEO of Infrastructure Capital Advisors, noted, "There's no significant new institutional buyer on the margin." He added that his firm bought STRC near the June lows and sold most of its position in the $90s range.

Such large-scale self-buying complicates the STRC recovery story. Strategy built its preferred share structure partly to reduce reliance on issuing common stock. Yet, when market sentiment shifted, the company ultimately had to sell common stock to support the preferred shares. Over the past year, the company's common stock has fallen roughly 60%. Since July 20, approximately $765 million of the funds Strategy used to buy back STRC — about 80% of the total — has come from common stock sales. An additional $161 million came from bitcoin sales. In other words, a financing arrangement designed to reduce dependence on common equity has now flipped into one that requires selling common stock to sustain itself.

Reversed Financing Logic: Selling Equity to Buy Preferreds

If STRC can return to par without Strategy acting as the primary buyer, the company could once again issue preferred shares to fund bitcoin purchases while easing pressure on its common stock. But whether that can happen remains uncertain. Alexander Blume, co-founder and CEO of Two Prime, explained, "Right now they're selling Strategy common stock to raise cash to buy STRC, not to buy bitcoin. For people who bought the stock to 'amplify' bitcoin exposure, this doesn't generate returns in the short term, and it's not what they wanted."

This runs counter to the very logic that fueled Strategy's rise. When the common stock trades at a high premium relative to the value of its bitcoin holdings, the company can issue shares, use the proceeds to buy more bitcoin, and potentially increase per-share bitcoin holdings. That helps sustain the premium, making further share issuance more attractive. The preferred stock was meant to accelerate this flywheel. But for STRC to become a sustainable funding source, investors must be willing to buy it at $100 or above — the baseline for new issuance not to dilute shareholders.

Rajiv Sawhney, head of international portfolio management at Wave Digital Assets, put it bluntly: "The simplest explanation is that STRC only works as a product when it trades at par. If it's at $71, it's worthless as a financing tool and is effectively toxic capital." He added, "The price is the product."

The Economics of Buybacks: Retiring Debt at a Discount, Resetting Coupons

This also explains why the buybacks may make economic sense. Buying back and retiring preferred shares with a $100 par value at a price below par effectively eliminates a liability that costs $12 per share annually in dividends, at a discounted cost. Sawhney noted that buying back at $85-$90 is a very attractive balance sheet transaction. If STRC returns to par and the dividend yield eventually resets lower, it could help Strategy reduce future financing costs. He described the buybacks as "spending money to reset the coupon."

Strategy has also strengthened its liquidity buffer and doubled its digital credit securities repurchase authorization to $2 billion.

Can STRC Stand Without Corporate Support?

The key question now is whether STRC can hold near par without relying on massive corporate buybacks as a floor. "There's no objective reason why STRC should trade at $100," Blume said, adding that whether Strategy can close the gap and reactivate its "at-the-market" (ATM) equity issuance machine remains to be proven.

Keeping STRC near par may require retail investors to re-enter the market. But they have already moved on from cryptocurrency, chasing gains in AI, tokenized stocks, and commodities instead. Hatfield noted, "It needs retail participation because the institutional preferred market is already saturated with these kinds of products." If that doesn't materialize, the new financing logic will look starkly different from the old model: sell common stock, use the cash to prop up the preferred shares, and hope the preferreds eventually regain their role as a tool for raising capital to buy bitcoin.