Strategy Inc MSTR

Key data

The business

Strategy has two identities. The visible one is an enterprise analytics software business doing about $477M of annual revenue at roughly breakeven operating income, sold to corporate technology buyers, paid for through licences and support, and flat for a decade. The real one is a leveraged bitcoin holding vehicle: it issues common stock, convertible debt, and a growing stack of perpetual preferred to capital markets investors, then converts the proceeds into coins and holds them.

The economic engine is the issuance spread, not the software. When securities are sold above the value of the bitcoin they buy, bitcoin per share rises and existing holders get richer without bitcoin moving at all. That ran forward for years at a two to three times premium and funded roughly 851,000 coins. At 0.84x it runs backward, because every share sold below net asset value hands current holders less bitcoin per share rather than more.

Business read. A bitcoin balance sheet with a financing overlay, attached to a software business funding none of it.

Things you might not know

Strategy reported losses of $12.5B in the March quarter and $8.2B in the June quarter, about $20.8B in six months, on diluted losses of $38.25 and $24.07 per share. Those figures are entirely bitcoin fair-value marks under the accounting adopted in 2025. They describe the coin price, and nothing about operations.

Debt is only $6.8B against $65.7B of bitcoin, roughly 10% loan to value, and the $14.4B standing ahead of common is perpetual preferred with no maturity date and no covenant that forces a sale. Those dividends can be deferred far more readily than debt can be defaulted, so the stress path runs through the preferred first.

Bitcoin sits 38.9% below its high while the stock sits 67.3% below its own, roughly 1.7 times the move. Holders lost the asset value and the premium in the same drawdown, which is this structure's leverage functioning exactly as designed, in the direction nobody underwrote it for.

Fundamentals

Two lines moved in opposite directions and both are true. Management added 9.3% more bitcoin per share in the June quarter, and net asset value per share still fell 17.5%, from $109.65 to $90.42, because bitcoin dropped 14.2% and the preferred claim ahead of common grew by $5.46B. The source run covers two quarters, so year-over-year comparisons are a genuine gap.

Valuation

Same-basis peers would be Metaplanet, Semler Scientific, Twenty One Capital, and Marathon Digital.

Every line here is a ratio to the balance sheet rather than to earnings, because the earnings are bitcoin marks. The market pays $39.4B for a $46.9B residual claim. No peer figures were pulled in this run, so the peer column is left empty rather than guessed.

Management

Compensation

The linchpins

Win big if

Bitcoin appreciates meaningfully from $77,159 and the 16% discount closes at the same time, paying holders twice, once on the coins and once on the gap. The first observable proof is the September quarter showing bitcoin per share still rising while at-the-market common issuance below net asset value pauses, or turns into repurchase, which would demonstrate the discount is being managed rather than harvested. The confirming signal is preferred issuance flattening while the annualized $1.6B obligation holds near where it sits and net asset value coverage over the preferred widens.

Surprised down if

Bitcoin drifts sideways or breaks lower while the preferred stack keeps growing, and the machine grinds common holders down through issuance below net asset value that the coupon makes hard to stop. The first observable proof is the September quarter showing bitcoin per share falling for the first time, reversing the 9.3% gain. The confirming signal is the preferred stack passing $18B, a deferred preferred dividend, or bitcoin breaking its 52-week low of $57,748, which would leave roughly $27B of net asset value standing against $14.4B of preferred.

Last word

You pay $0.84 for a dollar of bitcoin; the missing 16 cents is the queue behind $14.4B of preferred.