Retail Investors Growing Exposed to Bitcoin Giant Strategy’s STRC Over MSTR, Says CEO

Strategy CEO Phong Le has indicated a notable shift in retail investor interest, with the company's flagship preferred share (STRC) becoming more popular than its common stock. This trend highlights a strategic pivot in how Strategy is attracting capital, focusing on investors seeking stable, high-yield digital credit.

Retail Investor Preferences Evolve

While retail investors currently hold approximately 40% of Strategy's common shares, they now constitute about 80% of those invested in the preferred STRC shares. This preferred product, which pays an annual dividend of 11.5%, was introduced alongside Strategy's $2.5 billion debut last year. CEO Phong Le noted on X that retail investors appear to "prefer low-volatility, high-yield digital credit." This observation comes as Strategy's common stock (MSTR) has experienced a significant price decline of 56% over the past six months, falling to $134.

The STRC product, which trades on the Nasdaq, is now accessible on platforms popular with retail investors, including Robinhood, Kraken, and Webull. Retail investors hold an estimated $4 billion worth of STRC, representing 80% of its market cap. In contrast, retail holdings of common shares amount to approximately $18.5 billion, based on 40% of Strategy's $46.3 billion market cap.

Analyst Perspective on Risk and Yield

Mark Palmer, an equity research analyst at Benchmark-StoneX, believes the shift in retail preference for STRC over common stock is logical from a risk-adjusted perspective. He explained that Strategy's common stock, while offering potentially unlimited upside, functions as a leveraged, non-yielding Bitcoin proxy, making it more suitable for sophisticated, risk-tolerant investors. In contrast, STRC provides a predictable return through its high yield and low volatility, with significant Bitcoin overcollateralization mitigating downside risk. Palmer stated that STRC aligns better with how most retail investors typically view income-generating assets.

Analysts at Benchmark have set a year-end price target of $705 for Strategy, positioning them among the firm's most optimistic on Wall Street. This contrasts with TD Cowen, whose analysts recently reduced their price target for Strategy to $500 from $440.

STRC's Market Mechanics and Capital Formation

Lance Vitzana, managing director of equity research at Benchmark, noted an increase in STRC issuance following Strategy's annual conference last month, where the product was marketed extensively. Strategy has raised over $1.5 billion through STRC this month alone, with the product engineered to trade near its $100 par value. This issuance represents about 33% of STRC's market cap.

The company's strategy involves issuing more STRC shares when the preferred share trades above its par value to increase its Bitcoin holdings. Conversely, if STRC falls below par, Strategy plans to increase the dividend to stimulate demand and bring the price back towards its target. Palmer added that while institutional investors are also allocating capital to STRC, they are unlikely to replace demand from individuals. Institutions typically favor the greater liquidity and asymmetric risk-reward profile of Strategy's common equity. Palmer concluded that STRC is successfully cultivating a distinct investor base, thereby expanding Strategy's overall capacity to raise capital for Bitcoin accumulation.