MicroStrategy’s STRC preferred stock currently trades around $85, despite a detailed valuation pointing to a fair value near $96, indicating a 13% market mispricing according to Khing Oei, a former Goldman Sachs credit analyst with 25 years of experience.

Oei challenges the common perception that STRC’s 12% dividend yield translates to a 14% yield based on the current price, highlighting that the stock neither matures nor guarantees perpetual payouts. The market’s simplistic dividend-to-price calculation fails to consider that dividends only continue as long as MicroStrategy can afford them. This became evident during the June Bitcoin selloff when STRC shares plunged 25% below their $100 par value, inflating the yield figure.

By applying bond valuation methods, Oei evaluates STRC’s worth based on expected cash flows rather than nominal coupons. MicroStrategy’s latest figures reveal 843,775 Bitcoin holdings valued at $54 billion alongside $3 billion in cash. After senior debts and preferred shares claim $8 billion, $50.2 billion remains to support STRC’s $10.5 billion liability. Given dividends of $1.73 billion annually, even a flat Bitcoin price scenario would sustain payments for 29 years.

Discounting these payments at 12%, Oei arrives at a valuation of $96.30 for STRC, surpassing the market price of roughly $85. This discrepancy suggests investors are pricing in either a dividend cut or higher risk than Oei’s model suggests, especially as STRF shares higher in claim priority yield only 10.4%, revealing an unusual yield gap. If Oei’s thesis holds, investors gain a current 14% yield plus potential capital gains as the price moves to fair value.

The trajectory of Bitcoin prices remains the key driver for STRC valuations: should Bitcoin hit $80,000, STRC could approach par value at $100, whereas a decline to $40,000 would depress it to $58. MicroStrategy has raised the dividend several times from the initial 9% in July 2025 to the current 12%, aiming to support the share price.

This analysis signals that an informed credit valuation approach is key to avoid misleading yield interpretations on crypto-related preferred stock. Investors weighing STRC should consider structural debt priorities and Bitcoin’s price dynamics critically.