Strategy STRC Valuation Sparks Debate as Analyst Sees 13% Upside Despite 14% Yield

A 14% yield on Strategy’s STRC preferred shares has attracted investor attention, but veteran credit analyst Michael Oei argues the figure paints a misleading picture of the Bitcoin-linked security’s true value.

Oei, who spent 25 years valuing distressed debt at Goldman Sachs and hedge funds, says investors should not calculate STRC’s value by simply dividing its 12% dividend by the current market price. According to him, that method assumes the preferred shares will continue paying dividends indefinitely, even though STRC has no maturity date and dividends depend on Strategy’s financial strength.

The misconception grew after STRC fell about 25% below its $100 par value during Bitcoin’s June selloff, pushing the headline yield above 14%.

Instead, Oei values STRC like a bond by estimating the actual cash flows it can realistically generate. Based on Strategy’s latest holdings of 843,775 Bitcoin worth roughly $54 billion and an additional $3 billion in cash, he notes that about $8 billion is reserved for debt and senior preferred obligations before STRC’s $10.5 billion claim.

After accounting for those senior claims, Oei estimates $50.2 billion supports the preferred shares. With STRC requiring approximately $1.73 billion annually in dividend payments, he concludes that Bitcoin would only need to appreciate about 3.4% per year for the dividend to remain sustainable indefinitely. Even if Bitcoin never rises again, he estimates the available backing could fund dividends for roughly 29 years.

Discounting those projected payments at a 12% rate produces an estimated fair value of $96.30 per share, well above the recent trading price of $85.29. Oei argues the gap represents roughly 13% undervaluation, while the current market price reflects only about 17 years of expected dividend payments.

He also believes Strategy has additional ways to support STRC, including raising cash reserves, increasing the dividend rate, or repurchasing shares below intrinsic value.

Still, critics remain cautious. Oei leads Treasury, a European Bitcoin treasury company, giving him an interest in the asset class. Skeptics, including economist Peter Schiff, continue to question Strategy’s long-term Bitcoin strategy and whether its multi-billion-dollar cryptocurrency holdings can sustain shareholder returns if Bitcoin prices weaken significantly.