Benchmark affirms Strategy Buy rating, sees no major issues with STRC

U.S. investment bank Benchmark is maintaining its Buy rating and $570 price target for Strategy (MSTR), despite a recent sharp decline in the company's STRC preferred stock. Benchmark analyst Mark Palmer explained that STRC is not a stablecoin like TerraUSD (UST) and does not rely on an arbitrage mechanism. He described STRC as a variable dividend perpetual preferred stock based on Strategy's holdings of 847,000 BTC, valued at approximately $55 billion. Palmer analyzed the recent drop not as a structural problem but as a re-evaluation driven by changes in the market's required rate of return. Palmer stated that the stock cannot be considered to be "depegging" as it was never designed to be pegged to $100, adding that the recent movement is a result of an adjustment in the market's required yield. Benchmark also noted that Strategy holds about $1.4 billion in cash and has the flexibility to adjust its dividend policy and capital structure. "While the recent price declines in STRC and MSTR can be seen as a stress test for Strategy's financing model, they do not signify a structural collapse, given its Bitcoin-based balance sheet and ability to adjust its capital structure," Benchmark added.