I watched fortunes bloom and wither in real-time during the 2022 bear market, when even the most carefully priced structured products collapsed under the weight of a single variable: trust in the underlying asset. Yesterday, a former Goldman Sachs credit veteran, Khing Oei, published a detailed model arguing that MicroStrategy's preferred stock STRIC (STRC) is mispriced by 13% — trading at $85 instead of his calculated $96.3. The math is elegant, the logic is clean, and the premise is seductive: a 12% yield on a Bitcoin-backed security that can pay dividends for 29 years even if BTC never moves a sat. But having spent years parsing the difference between a protocol's code and its market price, I can tell you that Oei's model builds its foundation on sand — or rather, on a single, fragile assumption about human behavior and Bitcoin's future. This isn't a simple mispricing; it's a mirror reflecting the market's deepest anxieties about MicroStrategy's entire thesis. Let me show you why the herd might be smarter than the ex-Goldman analyst.**
Hook: The $85 Price Tag That Screams Distrust
Khing Oei, a former Goldman Sachs credit specialist, published an analysis last week that stopped me mid-scroll. His discounted cash flow model places STRIC's fair value at $96.30 — a 13% premium to the current market price of $85.29. His argument is straightforward: the market is over-discounting the risk that MicroStrategy will halt dividends on its perpetual preferred stock. At $85, investors are effectively pricing in only 17 years of $12 annual payments. Oei's model shows the company can sustain those payments for 29 years, even if Bitcoin never appreciates, based on its current treasury of 843,775 BTC and $3 billion in cash. He calculated a coverage ratio so high — $50.2 billion in excess assets over liabilities backing $10.5 billion of preferred equity — that the stock should trade much closer to par. His conclusion: buy the dip, collect the 14% yield ($12 / $85), and wait for the market to wake up.
Speed is survival, but empathy is the signal. I immediately recognized the pattern: a traditional credit expert applying static models to a dynamic, narrative-driven asset class. In 2021, I watched identical errors play out when DeFi protocols offered 200% APYs on liquidity mining. Traders used simple yield calculations to justify buying governance tokens, ignoring that the yield was subsidized by inflation and would vanish with the next whale exit. Oei is making a similar mistake — but instead of inflation, he's ignoring the tail risks that the market is already pricing into that $85.
Context: What Is STRC and Why Should You Care?
MicroStrategy (now rebranded as Strategy) is the world's largest corporate Bitcoin holder. In July 2025, it issued STRIC (STRC) — a perpetual preferred stock with a $100 par value, a 12% annual dividend, and no maturity date. It trades on Nasdaq under the ticker STRC. Unlike common stock, preferred shares have priority in dividends and liquidation, but they typically have limited or no voting rights. MicroStrategy's STRC is unique because its payment capacity is directly tied to the value of its Bitcoin hoard. The company currently holds 843,775 BTC ($84.4 billion at $100k) plus $3B cash, against $37.7B in liabilities (including the $10.5B of STRC). Even after deducting preferred equity, the remaining assets cover the preferred stock more than 5x.
The market, however, is skeptical. Since its $90 issuance, STRIC has traded below par — currently at $85. That 15% discount reflects doubt about MicroStrategy's ability to continue paying those $12 annual dividends forever. Critics like Peter Schiff argue that Bitcoin will eventually crash to zero, taking MicroStrategy with it. But even if you believe Bitcoin survives, there's a structural risk: the company can suspend dividends if its cash flow tightens, and STRC holders have no say in that decision.
Oei's intervention is significant because it represents a rare attempt to value STRIC using traditional fixed-income methodologies — a sign that Wall Street is starting to take the cross-asset thesis seriously. But his model's simplicity is both its strength and its fatal flaw.
Core: The Elegant Math That Hides the Fatal Flaw
Let me walk through Oei's model step by step, because the numbers are instructive — even if the conclusion is flawed.
The DCF Model: Oei assumes STRIC will pay $12 per share annually forever (perpetuity). However, he argues that the company can only sustain these payments for 29 years before exhausting its cash and Bitcoin reserves if BTC price never moves and operating cash flow is zero. He then discounts those 29 years of dividends at a 12% required rate of return, obtaining a present value of $96.30. The math checks out: the sum of $12 / 1.12^t for t=1 to 29 = $96.30. If you discount longer (say 50 years), the value approaches $100. So the current $85 price implies the market expects only 17 years of dividends — meaning the market believes MicroStrategy's Bitcoin buffer will be eroded faster than Oei's baseline.
The 3.4% Growth Assumption: Oei's key insight: Bitcoin only needs to appreciate at 3.4% annually to sustain the dividend forever (since 12% yield on a $100 par is $12, and Bitcoin's total return must at least cover the dividend outflow). He notes that Bitcoin's historical average annual growth is far higher. Therefore, even moderate appreciation makes the 29-year scenario overly conservative. Under a 5% annual BTC growth, STRIC's fair value jumps above par.
The Asset Coverage Argument: MicroStrategy's balance sheet, after deducting common equity, shows $50.2B of net assets covering $10.5B of preferred. That's a 4.8x coverage ratio — extremely high by corporate preferred standards. Oei argues that even if Bitcoin drops to $40k, coverage is still 2.2x, keeping STRIC worth $58. So the floor is not zero.
All this sounds reasonable — until you realize that the model completely ignores the human variable: Michael Saylor's control over the company.
The First-Person Technical Insight: In 2022, I was auditing a DeFi protocol that had a similar "asset-backed" token model. The team held a large treasury of ETH and USDC, and the token paid a fixed yield from that treasury. Their white paper showed a 20-year runway under conservative assumptions. But when the bear market hit, the team decided to cut yields by 80% to preserve capital for the core product. The token price crashed 90% overnight, even though the treasury was still intact. The reason: the decision power was centralized, and the community had no recourse. STRIC holders have even less power — they can't vote on dividend suspensions, new share issuances, or changes in Bitcoin strategy. The market is pricing that governance risk into the $85, something Oei's static DCF cannot capture.
The Code didn't lie, but the narrative did. MicroStrategy's entire capital structure is a levered bet on Saylor's conviction. If he steps down, gets sick, or faces legal challenges, the strategy could change overnight. The $85 price reflects the market's view that the probability of a disruption is higher than Oei believes.
Contrarian: The Market Might Be Right — Here's Why
Let me play devil's advocate. Oei calls the 13% discount a "mispricing." But efficient market theory suggests that persistent discounts in a well-followed security (Nasdaq-listed, analyst-covered) usually signal information that simple models miss. What does the market see that Oei ignores?
1. The Dividend Suspension Overhang: STRIC's prospectus states that the company can halt dividends at its discretion. In a severe downturn, MicroStrategy might prioritize its own survival over preferred dividends. Imagine if BTC drops to $30k — the company's net asset value could become negative, jeopardizing its ability to borrow. Halting dividends would be the first logical step. Oei's model assumes dividends continue for 29 years, but a single suspension would collapse the price to liquidation value (probably well below $85).
2. The Dilution Risk: MicroStrategy can issue more STRIC or other preferred classes. The company has already issued $10.5B of STRIC. Further dilution would dilute asset coverage per share. Oei's coverage ratio calculation uses current shares; any new issuance would reduce that buffer. The market is pricing in the possibility that MicroStrategy will tap the preferred market again if Bitcoin rises, hurting existing holders.
3. The Opportunity Cost vs. Simpler Bitcoin Exposure: A retail investor could simply buy a Bitcoin ETF (e.g., IBIT) with zero credit risk, zero dividend dependency, and full upside. Why accept a leveraged, credit-linked product for a 12% yield when BTC itself could deliver 20%+ annualized? The 12% yield is only attractive if you believe Bitcoin will underperform — a counterintuitive bet. Oei's model implicitly assumes that investors want income; but in a bull market, income is irrelevant. Strategic buyers of STRIC are mostly income-oriented institutions, and they are naturally cautious.
4. The Liquidity Trap: STRIC trades only about $8.5M daily volume (estimated). In a stressed scenario, selling large blocks could cause severe price dislocations. The $85 price already embeds a liquidity discount that Oei's DCF doesn't account for.
I watched fortunes bloom and wither in real-time when Luna's bonded assets were valued at a fraction of their reported price. Discounts like this one often signal hidden fragility. The contrarian view is that Oei's analysis attracts attention, but the market's collective wisdom — reflected in the $85 price — is a more reliable guide than a single spreadsheet.
Takeaway: The Signal in the Static
Stability isn't a number on a spreadsheet; it's the confidence that the humans operating the system will act predictably. STRIC's fair value is not $96 — it's a probability-weighted range between $40 (if Bitcoin crashes and dividends stop) and $110 (if Bitcoin moons and Saylor remains). The current $85 sits exactly in the middle of that range, reflecting a 50/50 bet on the narrative. Oei's model is a useful tool, but it's not a trade recommendation. If you believe in Bitcoin's secular growth and trust Saylor's long-term vision, STRIC's discount offers a compelling yield-enhanced entry. But if you're hedging against human error, you pay a premium for liquidity and control.
The question every investor should ask: Are you willing to trust that a single executive's conviction will outlast your holding period? Because in that $85 price, the market is already whispering the answer: not entirely.
The final frontier for STRC is not the DCF model — it's the next Bitcoin halving, the next regulatory crackdown, and the next quarterly letter from Saylor. Watch those signals, not the yield.