On March 10, 2021, Strategy (formerly MicroStrategy) founder Michael Saylor encouraged investors to use leverage and even mortgage their homes to buy Bitcoin ($BTC). Five years later, the company’s CEO von Leh is talking about mortgages again, but this time it’s related to acquiring Stretch Corp. (STRC) instead. $BTC.
Le spoke on Nathalie Brunel’s popular Bitcoin show about STRC stock, which currently pays a variable annual dividend of 11.5% with no guarantee of principal repayment.
“It almost looks like a salary, right? It’s just coming in,” Le argued, incredulously comparing the income to STRC’s variable dividend, which the board could suspend at any time.
He also recommended STRC to people who “may have to pay a mortgage, pay a utility bill or pay a car bill.”
Then came Saylor’s surprising turn away from mortgages.$BTC CEO Le’s new mortgage for STRC. He told Brunel:
“I just bought STRC for $250,000 last week. I bought it just to experience the experience, and it’s fun.”
“I have a monthly debt. I have a 30-year mortgage at 1.75%, right? And if I could, instead of paying off that mortgage, I could invest it in a product that pays 11.5%. That’s 10 times my mortgage rate.”
“I basically make money by taking money and putting it in STRC, getting an 11.5% interest rate and paying off a 1.75% mortgage.”
STRC home loan instead $BTC
In the same video, Lee also claimed that STRC “grew faster than the iPhone” and falsely claimed that sales of its own stock were somehow growing “revenue” faster than Apple’s early physical product sales.
However, raising capital by selling shares does not generate income. This is a management accounting term.
As in Saylor’s case, this advice comes from highly compensated executives looking to gain experience.
Like Saylor, Lee doesn’t need a $250,000 mortgage dividend compared to his annual compensation of more than $15 million.
Mr Lee himself revealed the uncomfortable reality of who is taking this mortgage advice. he recently admitted that Approximately 80% of STRC shareholders are individual investors.
The numbers, which he cited with apparent pride, mean that those most exposed to economic hardship and seeking risky high yields (as Lee describes them, those with mortgages, utilities and car payments) make up the vast majority of STRC’s investor base.
DeFi traders are piling risk on top of Strategy’s risky STRC
Unfortunately, Le did not highlight the language that Strategy itself publishes on its STRC information page.
Cash dividends are not guaranteed and STRC has no guarantee of principal repayment. The board of directors is free to suspend payments and adjust the dividend interest rate at any time.
Mr. Le likened STRC’s monthly dividend check to a salary. However, unlike dividends, salaries cannot be canceled even if Strategy’s performance deteriorates.
