Strategy Inc.'s Stock Plummets to Two-Year Low Amid Funding Concerns

Strategy Inc.'s stock price has fallen to its lowest in two years, dropping below $100 on June 22. This decline has been attributed to pressure building around the company's Bitcoin-heavy balance sheet and its funding model.

The company held 847,363 BTC as of June 21, worth roughly $53 billion at current prices, and had increased its cash reserve to about $1.4 billion. However, this increase in cash reserves has not been enough to alleviate concerns over the company's funding model, which is driven by its variable-rate perpetual preferred stock (STRC).

CryptoQuant Head of Research Julio Moreno warned that Strategy should pause Bitcoin purchases until its cash reserves and dividend coverage recover. He estimated that the firm may need roughly $2.8 billion in reserves to restore 24 months of coverage against annualized dividend commitments of about $1.2 billion.

Benchmark analyst Mark Palmer, however, offered a counterpoint, describing STRC's decline as a market-driven reset of necessary yield rather than a structural breakdown. He reiterated a 'Buy' and a $570 price target on MSTR, roughly over 400$ upside from the June 22 close.