STRC (Strategy Series A Perpetual Preferred) — Risk Report

Scope: dependency analysis. This report covers STRC as the instrument sitting underneath several assets in this coverage — apxUSD, apyUSD and sUSDat all depend on it. It is NOT an equity investment analysis of STRC as a security. No buy or sell guidance is intended or implied, and yield-versus-peer, call-schedule and preferred-market relative-value questions are out of scope. The score axes describe STRC’s reliability as a backing asset for something else, not its attractiveness as a holding. For the issuer beneath it see the MSTR report; for the on-chain wrapper see STRCx.

Elevated risk · 4.0/10 | Listed: NASDAQ: STRC | Instrument-level dependency analysis

Instrument	Dividend	Par	Trading	Issuer
Perpetual preferred stock, no maturity	12.00% annual, paid semi-monthly, variable and discretionary	$100 stated amount	$99.88, 0.12% below par (2026-10-12)	Strategy Inc.

Why this report exists

STRC is the convergence point under three separate assets in this coverage, and until now its only published treatment sat inside the report on its wrapper. That is backwards — the wrapper inherits the instrument’s risk, not the other way round.

⚠️ How big is the exposure? The honest answer has two halves, and only one of them is measured.

Measured — an on-chain balance times a market price:

STRCx held by Apyx	$66.63M	691,404.60 tokens, read on-chain

Inferred — derived by subtraction from issuer disclosures, not observed:

		how it is arrived at
Apyx raw STRC	$119.05M	the issuer’s STRC bucket minus the on-chain STRCx above; custodied off-chain at a brokerage
Saturn raw STRC	$78.72M	total assets minus the on-chain buffer; our monitoring flags it oracle_unverified and the field is literally named implied
inferred subtotal	$197.77M

Adding those gives about $264.4M of STRC-family exposure across the three assets — but that total is two issuer attestations plus one on-chain balance, not a measurement. Roughly 60% of Apyx’s reserves and 98.55% of Saturn’s are attributed to STRC on that basis.

⚠️ And there is a coincidence in those numbers worth pointing out, because it changes what the headline means. The share that is raw STRC rather than the wrapper is about 75%. The share that is inferred rather than measured is also about 75%. They are the same 75% — raw STRC is precisely what both issuers derive by subtraction, because it is the part that sits off-chain. So “three-quarters of the exposure is the raw instrument” and “three-quarters of the exposure is a residual” are not two facts. They are one fact stated two ways.

✅ What is solid regardless: Saturn holds no STRCx at all. That is a direct on-chain read of zero, not a residual — so sUSDat’s dependency really is on the raw instrument, and a reader who has only seen the STRCx report has not seen it.

None of this is an allegation that the STRC is not there. Both issuers disclose it, Apyx publishes a continuous attestation feed, and nothing contradicts either figure. It is a statement about what can be checked from outside: one balance can, and about three-quarters of the exposure cannot.

What STRC actually is

A perpetual preferred stock: no maturity date, no repayment obligation, and a dividend Strategy declares rather than owes in the way it owes bond interest. The stated amount is $100 and the current rate is 12.00% annually, paid semi-monthly, on roughly 88,954,899 shares — about $8.90B of par at 2026-10-11. That count is derived, not disclosed: 104,895,000 shares on Strategy’s STRC dashboard at 2026-06-08, less 15,940,101 cumulative repurchases, with no preferred issued over that span. Strategy has not published a post-buyback count.

That makes STRC’s annual dividend obligation roughly $1.07B, about 68% of Strategy’s entire ~$1.57B annual preferred-and-interest bill (both derived on the count above). The latest 1,932,145-share repurchase alone removes about $23.2M a year of STRC dividends at 12%. STRC is not one instrument among several; it is the dominant claim.

⚠️ The dividend is a discretionary soft floor, not a peg

This is the single most misread feature of the instrument, and getting it wrong changes what you think you own.

Strategy’s June 2026 “Digital Credit Capital Framework” replaced what had looked like a mechanical par defence. The earlier reflex — if STRC drifts below par, raise the dividend until buyers return — is gone. Strategy states explicitly that it will not necessarily increase the rate solely because STRC trades below its stated amount, and our monitoring records the regime as a discretionary soft floor with automatic hiking on sub-par trading set to false.

What defends the price instead is discretionary and finite: a buyback programme, and a cash reserve. Both are real. Neither is a commitment.

In practice the discretion has now been exercised in both directions, which is what makes it legible rather than theoretical:

• The August rate was held at 12.00% despite mid-$80s trading that would mechanically have implied an increase — and management stated it will not recommend a change until STRC demonstrates sustained trading at or near $100. That is the ratchet being declined, and then forward-disclaimed.
• The buyback was used, at increasing scale, for four consecutive weeks.

Read the rate as a budget rather than a promise. Holding it preserves ceiling headroom, which matters for the reason in the next section but one.

The buyback: real, finite, and getting less effective

Strategy authorised $1.0B for repurchasing its digital-credit securities, with STRC as the explicit initial priority, and ⚠️ doubled that authorisation to $2.0B on 2026-09-08 (8-K accession 0001193125-26-384402, period 08-31→09-07). The programme has been used hard:

week ending	repurchased	approx. average price
2026-07-26	$25.0M	~$86.50
2026-08-02	$81.2M	~$89.00
2026-08-09	$108.6M	~$94.30
2026-08-16	$132.2M	~$95.19
2026-08-23	$136.4M	+$0.11 on the week
2026-08-30	$151.8M	~$97.48
2026-09-07	$176.3M	~$97.36
2026-09-13	$139.3M	~$98.07
2026-09-20	$174.0M	~$98.24
2026-10-04 filing periods	$176.3M	~$99.39
2026-10-11	$192.4M	~$99.58

⚠️ $354.8M remained at 2026-10-11 under the doubled $2.0B authorisation. Strategy repurchased 1,932,145 shares for $192.4M, about $99.58/share. STRC itself closed at $99.88 on October 12, so the direct instrument evidence improved. But the issuer bid is demonstrably large, discretionary and finite—not a contractual floor, redemption right, or peg—and is now being funded against a rapidly declining USD Cash balance.

⚠️ The last two rows are stated as a weekly move rather than an absolute average, because that is what the filings support. The 8-K gives an implied repurchase price of $97.48 for the most recent week; the intermediate figure is a delta from the week before it.

⚠️ Three things about that table matter more than the total.

⚠️ The per-dollar efficacy of the bid has run both ways, and the honest conclusion is that this metric cannot settle the question. Through mid-August the pattern looked one-way: $25M moved STRC from about $86.50 toward $88.90, while $132.2M — five times the spend — moved it barely at all. The next two weeks ran the other way. $136.4M moved the average execution price $0.11; $151.8M moved it $2.18.

⚠️ State that narrowly, because an average repurchase price is not a market print. It is the mean of whatever the programme filled at over a week, and it cannot distinguish a secondary re-rating that the buyback merely bought into from more aggressive bidding that moved the price itself. A rising average is consistent with both, and this page is not able to say which.

⚠️ The exhaustion question this report was tracking is VOID, not answered — the denominator was replaced. This page put the remaining $364.8M at about 2.4 weeks of spend, landing mid-September, and named that as the decision point. ⚠️ On 2026-09-08 Strategy re-authorised the programme from $1.0B to $2.0B and bought its largest week yet, $176.3M for 1,810,885 shares at about $97.36. So the runway did not run out and the forecast was not missed: the arithmetic stopped applying.

⚠️ A re-authorisation is two-sided and should not be read as pure reassurance. It removes the near-term exhaustion that this report identified as the thing to watch, and it is also evidence that the issuer intends to keep bidding — which is the same fact seen from the holder’s side and from the funding side. The bid is no longer finite on the horizon this page was measuring, but it remains discretionary, and nothing about the doubling is contractual.

What survives unchanged is the shape of the question, only on a longer horizon: the programme is still finite by construction, and ⚠️ a price recovery riding an issuer bid is still not a re-rating. The distinction simply stops being decided in September.

⚠️ And the funding source changed again. Through early August the buybacks were funded by Bitcoin sales; common equity then funded them before USD Cash took over. In the week to 10-11, Strategy sold 125,183 MSTR shares for $21.0M, bought 250 BTC for $21.5M, and spent $192.4M repurchasing STRC. USD Reserve held at $4.88B, but separate USD Cash fell $833.4M → $640.5M. The bid works near par while its most immediate funding pocket shrinks.

⚠️ And a question this page cannot answer, first exposed by the 2026-08-31 filing: STRC sold ZERO on its own ATM against $17,510.8M of available capacity — while common equity funded the buyback. No preferred issuance occurred in the 2026-10-05 filing either, while the common ATM resumed. That is not shelf exhaustion: capacity exists and remains unused. It is either a choice not to issue preferred stock or an absence of demand at current terms, and the filing does not distinguish them.

That is not shelf exhaustion. The capacity is there and unused. It is either a choice not to issue the preferred, or an absence of demand for it at current terms, and the filing does not say which. ⚠️ The two readings point in opposite directions — a deliberate pause is a funding decision, while an absent bid on a $17.5B shelf is a demand signal about the instrument this report is about. It is filed here as an open question rather than resolved in either direction, and what the next filings show on that line is worth more than another week of buyback totals.

That is an improvement and a substitution at the same time. It stops the floor consuming the collateral — but it makes the floor depend on Strategy’s ability and willingness to issue common equity to defend the preferred, which is a transfer of value between classes.

⚠️ And it swapped which constraint binds, which matters more than the improvement. These are two different gates:

	the old gate	the new gate
what runs out	Bitcoin available to sell	the market’s appetite to absorb common issuance
what you watch	the BTC stack shrinking	mNAV, and whether ATM issuance stays accretive
how it arrives	gradually, and visibly on the balance sheet	can close quickly, and is a market condition rather than a company one

A downstream holder who was watching the Bitcoin stack for early warning is now watching the wrong thing. The stack stood at 845,050 BTC from 2026-08-31 through 09-13, then rose to 846,000 in the week to 09-20 (accession 0001193125-26-396093, read directly): 950 BTC for $75.7M, bought from USD Cash rather than from any new capital, with the common ATM idle for a third week. ⚠️ The funding has moved twice since the stack last grew on capital formation. The bid has run on three different mechanisms in six weeks — Bitcoin sales, then common equity, and now USD cash, which fell $1.44B → $1.30B → $1.05B across the last two weeks. ⚠️ And in the week to 09-20 the restricted USD Reserve fell for the first time, $5.10B → $5.04B, with the filing stating that $57.4M of it was used to pay preferred dividends and interest — the first reserve-draw sentence in any of these filings. That is one payment week and 1.1% of the reserve, a first observed net draw rather than a burn rate; but with the ATM idle nothing is topping the reserve up, so the dividend is now paid from the reserve rather than through it. Under the old framing a rising stack read as reassurance; under the current one it carries no information about the floor at all. The signal that matters is mNAV: at 0.9952 on 2026-08-24 it sits at parity, where equity issuance is roughly neutral rather than accretive. Read that as a level, not a trend — it has oscillated within about 2% of 1.0 for weeks, and the week-to-week direction is noise.

This is the fact that gates the downstream assets, because apxUSD, apyUSD and sUSDat all mark STRC to market — but the gate is now equity absorption, not collateral depletion.

Ability to pay, and what it rests on

The restricted Reserve remains substantial at $4.88B, but the liquid direction is adverse. USD Cash has fallen to $640.5M, only $140.5M above the report’s $500M trigger, while the issuer continues spending close to $200M a week on the near-par STRC bid.

On the $4.88B Reserve at 2026-10-11, and assuming zero new issuance inflow, that is roughly 55 months of STRC dividends alone, or about 37 months of the entire preferred-and-interest bill—on the derived ~$1.57B obligation above. Those are stress-scenario watermarks rather than forecasts, but they establish that the dividend is not close to being unfundable even as unrestricted Cash approaches its trigger.

Beneath the cash sits the Bitcoin. At the roughly $79,670 Strategy paid for bitcoin in the week to 09-20, the ~$1.63B preferred-and-interest obligation is about 2.4% of the 846,000-BTC stack per year, and STRC alone about 1.7%. On frozen assumptions that is decades of runway.

⚠️ The runway numbers are the least robust figures in this report and should be read as such. They assume a frozen BTC price, frozen share counts and frozen dividend rates — and all three move together in exactly the wrong direction under stress. A Bitcoin drawdown, continued preferred issuance and a rising STRC rate compound rather than offset.

⚠️ The rate ceiling is the mechanism to watch

STRC’s rate ratchets monotonically upward over multi-year horizons and is sticky on the way back down. That creates a ceiling problem that the runway arithmetic conceals.

At the current 12.00%, total obligation runway is around 37 years on frozen assumptions. At a 14% rate it is about 33; at 16%, about 30. Each stress cycle of roughly 125bp consumes ceiling headroom permanently, and there are only about two such cycles to 14% and four to 16%.

The practical read: at 14–16% Strategy plausibly elects to suspend the dividend rather than hike further. That is the tail a downstream holder is actually exposed to — not a default, but a discretionary suspension on an instrument with no maturity and no repayment claim. Holding the rate at 12.00% while the price sits below par is, in that light, the issuer conserving its own optionality.

What sits above STRC in a squeeze

Preferred dividends rank behind debt service. Strategy’s convertible notes therefore matter to a STRC holder even though they are a different instrument.

⚠️ Do not read the 2030 maturity as the binding date. Every convertible tranche carries a noncontingent holder put at 100% of principal in cash, well before stated maturity — which puts about $4.90B inside calendar 2028 and $5.91B, 88% of the stack, by 2028-09-15, with the first $1.01B in September 2027. The lowest conversion price in the stack is $149.77 against a common price near $119, so the puts are the rational path rather than a tail case. The MSTR report carries the full schedule.

Why this is in a STRC report: those are cash claims that rank ahead of the preferred, and they cluster eighteen months earlier than the headline maturity suggests.

Score breakdown

Axis	Score	Why
Volatility	5.0	Traded from $76.16 at the June 2026 low to $99.88 on October 12—a large recovery, but still a roughly 31% range on an instrument with a $100 stated amount. The direct evidence improved; the demonstrated volatility remains.
Liquidity	7.0	NASDAQ-listed with real secondary depth — the strongest axis, and the reason a downstream holder can mark it at all. Note this is the instrument’s liquidity, not the wrapper’s: the on-chain STRCx venue is thin, covered in that report.
Counterparty	4.0	The binding axis. The dividend is discretionary, price support is finite, and the instrument depends on one issuer. Direct evidence improved—STRC closed at $99.88—but Strategy spent $192.4M on the weekly bid while USD Cash fell to $640.5M. The Reserve still covers about three years of the preferred-and-interest obligation, but Cash is only $140.5M above the nearest trigger.
Redemption	5.0	Perpetual — there is no redemption right. A holder’s only exit is the secondary market at whatever price prevails. The mitigation is that the market is liquid and the issuer is buying; neither is a contractual claim.
Overall	4.0	Held. The $99.88 market price is stronger direct instrument evidence, but the near-par price coincides with a $192.4M issuer bid, only $354.8M of authorization remaining, and USD Cash at $640.5M. The recovery offsets rather than erases the finite-support risk. Appropriate as a disclosed backing asset; not as an assumed-stable one.

Who should care about this report

• Holders of apxUSD, apyUSD or sUSDat — this is what is underneath your position, at 60% and 98.55% of those reserves respectively. Mark it to market, not to par.
• Anyone reading the STRCx report — that covers the wrapper, which is about a quarter of the family exposure. This is the other three-quarters.

Who should avoid

• Anyone treating a 12% dividend as a fixed income. It is discretionary, it is variable, and the issuer has said in terms that it will not raise it merely because the price is below par.
• Anyone reading “perpetual” as “safe.” It means there is no maturity at which you get $100 back — only a market price and a dividend the issuer may revisit.

What to watch

• ⚠️ USD Cash below $500M—the nearest live trigger. Cash is $640.5M, only $140.5M away. The $4.88B restricted Reserve is a different pocket and must not be merged with it.
• Buyback capacity: $354.8M remaining. Exhaustion alone is not an automatic score trigger, because the board can re-authorize as it did before. What STRC does without—or after renewal of—the bid is still the clean test of organic support.
• ⚠️ Whether STRC issues anything on its own ATM. Zero preferred sold in all 17 weekly filings since 2026-05-26 against roughly $17.5B of frozen capacity; the common ATM went idle much later, in the last three filings. USD Cash now funds the buyback. A resumption reads as a funding choice; continued zeroes read as a demand signal, and the filings do not distinguish them.
• ⚠️ mNAV, which is now the floor’s binding constraint. With the buyback funded by common issuance rather than Bitcoin sales, the gate is whether the market keeps absorbing that issuance — not whether Bitcoin remains to sell. At 0.9952 (2026-08-24) mNAV sits at parity, where issuance is roughly neutral. Watching the Bitcoin stack for early warning now watches the wrong thing.
• Which pocket funds the bid. Bitcoin sales through early August, common equity next, and USD Cash most recently. The 10-05 filing assigns $154.1M of Cash to repurchases while the common ATM resumed separately. The first spends collateral, the second dilution capacity, and the third a finite balance; none is free.
• The dividend rate. Held at 12.00% and forward-disclaimed until sustained trading near $100. A rise signals the discretion being spent; a suspension is the tail.
• STRC’s discount to par. Just 0.12% at the October 12 close ($99.88), against roughly 24% at the June low. Read that improvement beside the size of the issuer bid.
• The two cash pockets. Reserve held at $4.88B while USD Cash fell $833.4M → $640.5M. The stable Reserve is constructive for dividend service; declining Cash is the immediate constraint on continued buybacks.

Live dashboard

Instrument price, dividend-rate history, the cash-service waterfall, and the downstream exposure reconciliation: tidresearch.com/dashboards/?asset=strc.

Related

• MSTR — the issuer beneath this instrument
• STRCx — the on-chain wrapper, about a quarter of the family exposure
• apxUSD · apyUSD · sUSDat — the assets that hold it

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This report uses Strategy’s 2026-10-12 issuer disclosure for the 10-05→10-11 period, the 2026-10-05 Form 8-K (accession 0001193125-26-413164), the Q2 2026 Form 10-Q (accession 0001050446-26-000044), and the 2026-06-29 Digital Credit Capital Framework 8-K (accession 0001193125-26-286871). ⚠️ EDGAR’s CIK feed still ended at the October 5 8-K when checked, so no October 12 accession is cited or implied. Quarterly filings are unaudited—reviewed, not audited. This is dependency-analysis scope, not investment guidance on STRC. Corrections welcome: info@tidresearch.com.

Revision history

• 2026-10-13 — October 12 issuer disclosure synced; scores held. Strategy repurchased 1,932,145 STRC shares for $192.4M at ~$99.58, leaving $354.8M authorized; STRC closed at $99.88. USD Reserve held at $4.88B, while USD Cash fell $833.4M → $640.5M, leaving $140.5M to the below-$500M trigger. Volatility 5.0 / Liquidity 7.0 / Counterparty 4.0 / Redemption 5.0 / Overall 4.0 held. The issuer release is live; EDGAR still ends at the October 5 8-K, so no October 12 accession is cited.
• 2026-10-06 — 10-05 8-K synced; scores held. Strategy repurchased 1,773,802 STRC shares for $176.3M at about $99.39, leaving $547.2M under the $2.0B authorization. At 12%, those shares remove about $21.3M/year of dividends. USD Reserve fell $5.02B → $4.88B, USD Cash ended at $833.4M, and common issuance resumed while preferred issuance remained zero. The bid works near par, but remains discretionary and finite.
• 2026-09-22 — Counterparty 4.5 → 4.0; Overall held at 4.0. The condition set for the axis on 09-08 — the USD Reserve falling while buybacks continue — printed on the 09-21 filing: $57.4M drawn from the reserve for dividends and interest in the same week as $174.0M of STRC repurchases. One axis, not the headline: STRC executed at ~$98.24 in the same week, and the recovery offsets the issuer notch. Volatility 5.0 / Liquidity 7.0 / Redemption 5.0 unchanged.
• 2026-09-22 — 09-21 weekly 8-K synced (accession 0001193125-26-396093, read at source); upstream issuer’s Funding axis cut 4.5 → 4.0 on the MSTR report, MSTR Overall held 4.5. STRC par and the dividend obligation restated on a derived 93,162,208-share count (104,895,000 at 06-08 less 11,732,792 repurchased): about $9.32B par and $1.12B/yr, replacing $10.25B and $1.23B, which had overstated the burden by about 6.5%; coverage on the $5.04B reserve about 54 months on STRC alone and 37 on the whole preferred bill. STRC buyback $174.0M for 1,771,238 shares at ~$98.24 (1.76% below par), a sixth consecutive week and the highest price yet; $875.1M remains of the $2.0B programme. The USD Reserve fell for the first time, $5.10B → $5.04B, with $57.4M used to pay preferred dividends and interest; USD Cash $1.30B → $1.05B; 950 BTC bought from cash (holdings 846,000); common ATM idle for a third filing; preferred ATM untouched in all 17 weekly filings since 2026-05-26. Watch-list item on the mid-September buyback exhaustion restated on the doubled programme.
• 2026-08-24 — initial publication at Overall 4.0 (Volatility 5.0 / Liquidity 7.0 / Counterparty 4.5 / Redemption 5.0). ⚠️ Exposure splits into $66.63M measured on-chain as STRCx and about $197.8M inferred by subtraction — the roughly 75% that is raw and the roughly 75% that is unmeasured are the same 75%. The 2026-08-17 filing shows no Bitcoin sold and STRC repurchases funded from common-stock issuance, so the binding constraint moved from the depth of the Bitcoin stack to the market’s appetite for common issuance.