Market cheers slower data center buildout as voters reject expansion
Voters approved 40 of 41 local data center restrictions; Microsoft and Amazon shares rose as the market welcomed a slower buildout.
MicroStrategy’s STRC rebounded 34% to $100, driven by buybacks and a broad market rally, though its ability to hold there is uncertain.
Stretch (STRC), MicroStrategy’s preferred stock carrying a 12% dividend, hit $100 on Wednesday for the first time since May. The company had put $208.2 million into repurchasing the shares over the preceding week.
Those who purchased STRC at its closing low of $74.57 on June 26 now see a roughly 34% gain from the price move. A portion of the buyback funds was generated by selling new common stock, diluting the holdings of all existing shareholders.
A broader rally in US equities helped lift the stock. By midday, the Dow Jones Industrial Average had risen roughly 2.9% following Democratic victories in both houses of Congress.
On his Truth Social platform, President Donald Trump celebrated the market performance.
“Stock Market just hit another Record High — 91 Days in just a short period of time — Less than two years. Your 401(k)s are through the roof,” he wrote.
The president did not specify which index he was referring to. At midday, neither the S&P 500 nor the Dow were above their respective record closing levels.
Strategy, the name MicroStrategy now operates under, saw its common stock (MSTR) rise roughly 6.7% to $144.67.
STRC is a preferred share that has no set maturity. Since the firm authorized daily dividend distributions, it has been paying a 12% annual cash dividend on every business day.
The company adjusts that dividend rate on a monthly basis and seeks to keep the stock trading in a $99-to-$100 band. Strategy can also issue new STRC shares into the market gradually to obtain cash. A filing from November 2 shows $17.5 billion in untapped STRC issuance capacity, with none sold during the prior week.
In October, investor Peter Schiff had claimed that Strategy had lost its issuance channel. For its part, the company funded the recent buyback in part through sales of new MSTR common stock.
Strategy itself states on its STRC information page that the dividend is not assured and could drop sharply. The company also notes the shares are not collateralized by its Bitcoin holdings.
The prior instance of STRC hitting $100 lasted for four trading days in mid-May before a decline in bitcoin pulled it lower. MicroStrategy owns 849,327 BTC, representing roughly 4% of the total circulating supply. An upcoming Monday filing will show if the recent $100 price triggers fresh STRC issuance or more buybacks.
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Voters approved 40 of 41 local data center restrictions; Microsoft and Amazon shares rose as the market welcomed a slower buildout.
STRC returned to $100 par for the first time since May after Strategy spent over $2B on buybacks and rate hikes.
Block agreed in principle to pay $764 million to resolve a Justice Department investigation, while its bitcoin gross profit fell by half in the third quarter.
US stocks rallied sharply, with major indexes up between 1.75% and 2.40%, but chart levels still need to be cleared to extend gains.