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Special Research Edition

Bottom Line

What we found in Strategy's Q1 2026 cycle is that the headline figures matter less than the structure they sit inside. Three findings stand out: STRC alone reached $8.5 billion in nine months, management says Strategy now represents 60% of the US preferred new-issue market, and STRC is already the #2 holding in BlackRock's PFF. For readers, the key implication is that Strategy now matters less as a quirky Bitcoin proxy and more as a live test of whether Bitcoin can be continuously securitized into credit and equity products that traditional markets will absorb.

Thesis

We approached this research by starting with Q1 and then zooming out. On the surface, the quarter offered familiar headline figures: 818,334 BTC held as of May 3, $11.7 billion raised year-to-date, software revenue of $124.3 million, and a management-reported mNAV, or market value of the total capital structure relative to Bitcoin net asset value, of 1.27x. But as we worked through the findings, what the research kept pointing back to was something more structural. Strategy is not easiest to understand as only a software company that bought a lot of Bitcoin, nor only as a leveraged equity wrapper around BTC. By management's own framing and by the shape of the issuance data, it is trying to become the securitization layer between Bitcoin and traditional capital markets. The path through that claim is straightforward: first who Strategy is today, then what the Q1 2026 earnings cycle actually said, then how those instruments are interacting with traditional markets.

Who Strategy Is Today

One company on paper, two activities in practice

We started by asking what Strategy actually is today as a company. The findings gave a clear answer: Strategy reports a single GAAP segment, but the business now clearly operates through two activities, Bitcoin treasury operations and AI-powered enterprise analytics software.

The software side is still real. FY2025 software revenue was $477.2 million, and Q1 2026 software revenue was $124.3 million, up 11.9% year over year, with subscription services up 59%. Leadership remains centered on Michael J. Saylor as Executive Chairman, Phong Le as President and CEO, Andrew Kang as CFO, and Thomas C. Chow as EVP and General Counsel.

We also found that the capital structure is broader than many readers may assume. As of February 13, 2026, Strategy had 314.1 million Class A shares, 19.6 million Class B shares, and five preferred series outstanding: STRK, STRF, STRD, STRC, and STRE. That fifth series matters because it shows the preferred stack is not a side project. Strategy is still an operating software company, but the organizational shape now supports a much larger capital-markets experiment.

The pivot became the company

We then asked how the company moved from enterprise software vendor to Bitcoin treasury vehicle. What the research found is that the shift was not a one-off balance-sheet decision. It became formal company strategy.

The strategic shift began in August 2020 with the first Bitcoin purchase. In September 2020, the board adopted a Treasury Reserve Policy making BTC the primary treasury reserve asset. By Q1 2021, raising capital to accumulate Bitcoin had become formal corporate strategy.

From there, the funding mix evolved in three stages. From roughly 2020 through 2023, Strategy relied on ATM, or at-the-market, common issuance, senior convertibles, and a collateralized term loan. In 2024, scale stepped up with $16.33 billion of Class A ATM proceeds plus multiple convertible offerings. In 2025, the architecture changed again: five preferred series were issued alongside 2030B converts and another $13.59 billion of Class A ATM proceeds.

The shift across instruments is easier to see in the picture below.

That sequence matters because, in our findings, it reads as intent rather than improvisation. By the FY2025 10-K, management described Strategy as a Bitcoin Treasury Company that "structures and securitizes Bitcoin." The software business is still there, but it is no longer the strategic frame. It now looks more like operating ballast beneath a balance sheet designed to manufacture investable BTC-linked instruments.

A capital stack that is large, layered, and moving away from converts

Once the strategic pivot was clear, we asked what the capital structure actually looks like now. The answer from the findings is that it is already large, layered, and increasingly organized around preferred equity rather than future convertible issuance.

As of March 31, 2026, Strategy had 314.1 million Class A shares and 19.6 million Class B shares, implying a common market cap of about $62 billion.

Above that common sits a sizeable preferred layer. The five preferreds total roughly $13.5 billion notional, with STRC alone at $8.5 billion, or more than 60% of the stack. There are also six convertible series due 2028-2032 with 0.625% to 2.25% coupons totaling $8.21 billion principal, plus $40.3 million of other long-term debt. Total indebtedness was $8.25 billion, and that debt sits senior to all preferreds, meaning the preferreds rank behind in payment priority if Strategy ever had to pay creditors out.

The chart below shows the layers to scale.

Against that sits the Bitcoin position: 818,334 BTC as of May 3, equal to 3.9% of total BTC supply and worth $64.1 billion at the cited market price, plus a dedicated USD reserve of $2.25 billion for preferred dividends and interest. We also found that management wants to equitize the convert stack over time and avoid new converts. The destination is not more debt complexity. It is common, preferred, BTC, and a cash reserve.

What the Q1 2026 Earnings Cycle Showed

Headline figures: continuity, with the machine still running

With that structure in view, we asked what Q1 itself actually showed. At the surface level, the findings looked familiar: more BTC, more capital raised, and another set of management KPIs.

Strategy reported 818,334 BTC as of May 3, worth $64.1 billion at $78,374 per BTC, with a cost basis of $61.81 billion and an average cost of $75,537.

The quarter's internally promoted performance metrics were softer than the prior comparison period. Q1 BTC Yield, the rate at which Strategy is growing Bitcoin per share, was 3.2% versus 11.0% in Q1 2025. Year-to-date 2026 BTC Yield was 9.4% versus 22.8% for FY2025. Bitcoin per share, measured against an expanded share count that includes preferreds and convertible bonds, still rose, but more slowly than a year earlier. BTC Gain was 21,329 BTC in Q1 versus 49,132 a year earlier, and BTC $ Gain was $1.45 billion versus $4.05 billion.

At the same time, the operating business remained visible. Software revenue was $124.3 million, up 11.9% year over year, with subscription revenue up 59% and gross profit at $83.4 million. Capital raised year-to-date reached $11.7 billion, split between $6.1 billion common and $5.6 billion preferred. The quarter did not change the story so much as confirm how large the machine has already become.

STRC dominated the quarter

When we asked what defined the quarter, the answer kept coming back to one instrument: STRC. The findings were decisive on that point.

Q1 2026 was decisively STRC-dominated: STRC ATM issuance raised $2.06 billion through 20.66 million shares, while Class A ATM raised $5.29 billion and STRK ATM was only $3 million. STRF and STRD ATMs were dormant.

Cumulatively, STRC reached $8.5 billion in just nine months. Management says that makes it the largest preferred stock by market cap in the world. The growth curve makes the pace clear.

The issuance mix also shifted sharply inside the quarter. In January, ATM activity was 88% credit and 12% MSTR common. By April, it had flipped to 17% credit and 83% MSTR common as the Bitcoin drawdown reweighted issuance.

Two April weeks still stand out in the findings: one $1.0 billion raise followed by a $2.2 billion raise the next week. STRC's dividend rate was also raised from 11.25% to 11.50% effective March 1, 2026. That combination of scale, active rate-setting, and sustained issuance is what makes STRC worth attention. It is no longer a concept product. It is functioning as a primary funding channel.

The dividend-frequency proposal is product iteration, not plumbing

We also wanted to know whether the proposed shareholder vote on STRC's dividend schedule was cosmetic or meaningful. The research pointed to the second reading: this looks more like product iteration than routine plumbing.

Strategy wants to move STRC from 12 dividend payments a year to 24, starting in July 2026 if approved.

The economics do not change. The proposal changes payment frequency from monthly to semi-monthly, with the first record date on June 30, 2026 and the first payment date on July 15, 2026. Management's stated reason is direct: improve attractiveness, enhance liquidity, and support better price stability.

That matters because, in the findings, STRC is being managed as an instrument whose market behavior can be tuned. The company is not simply issuing preferred stock and accepting whatever secondary-market profile follows. It is actively adjusting the user experience of the security in order to deepen demand and stabilize the channel. In that sense, the dividend-frequency proposal belongs in the same family as the coupon adjustments and price-band management. It is another signal that Strategy is iterating a market product, not merely maintaining a funding line.

Forward guidance reads like a balance-sheet blueprint

We then asked what management's forward guidance was really describing. The answer from the research is that it reads less like ordinary guidance and more like a blueprint for how the balance sheet is meant to scale.

Saylor's headline statement was the clearest version: Strategy expects to pass 1 million Bitcoin on the balance sheet within the next 36 months while funding all obligations with Bitcoin.

That sits inside a broader set of commitments. Management laid out a goal to double Bitcoin Per Share in seven years under a scenario assuming 16% Digital Credit issuance, a 9% dividend rate, and 1.75x mNAV. It also outlined six capital-markets principles: increase Bitcoin per share; grow STRC demand; reduce convertible debt proactively; size the USD reserve to credit demand and risk; adjust issuance scale to market conditions; and remain willing to sell BTC when advantageous.

The operating rule set for STRC was equally specific. If monthly average traded price falls below $95, management would recommend at least a 0.50 percentage-point rate increase; between $95 and $99, at least 0.25 percentage points; above $101, a rate decrease and/or follow-on offering. The message from the findings is straightforward: this is not passive treasury management. It is active balance-sheet engineering.

The macro framing was capital-markets disruption, not a Fed call

We also asked how management chose to frame the quarter. The findings here were notable because the central story was not the usual monetary-policy discussion. It was capital-markets disruption.

Strategy's own language was that it transforms "Digital Capital into Digital Credit and Equity," positioning itself as the securitization layer between a $1.6 trillion Bitcoin market cap and traditional preferred or fixed-income buyers.

Three threads carried that framing. First, Bitcoin was presented as programmable capital. Second, STRC was presented as a credit-index inhabitant, with Saylor stating that "Stretch is the #2 holding in BlackRock's PFF," the $14 billion preferred ETF. Third, management argued Bitcoin's risk-and-return profile can be split into a high-yield, lower-volatility credit product, STRC, and a higher-volatility equity product, MSTR common.

Phong Le also made the near-term demand point explicit: demand is more constrained by awareness and market development than by Fed moves. The quarter was therefore less a monetary-policy commentary than a product-distribution commentary.

In the Q&A, management treats the stack as a dynamic machine

Finally, we looked at what the analysts were actually asking and how management answered. That part of the research reinforced the same thread: management appears to treat the stack as a dynamic machine rather than a set of separate financing buckets.

Eight named analysts focused on five broad themes: proactive capital-stack management, the effect of lower rates, decentralized finance, or DeFi, products built on STRC, decentralization concerns as institutions accumulate BTC, and what lower BTC volatility would do to the model.

Across those answers, management's thread was consistent. It is willing to sell BTC for tax or optimization reasons, retire all convertible bonds, which can convert into shares under set conditions, via STRC, equity, or cash, and lean further into the use of leverage if BTC volatility falls. On the DeFi question, management said yield coins and leveraged yield products are already being built on STRC. On the relative-risk debate, Saylor said the market "does not yet agree."

That matters because it reveals the mindset behind the structure. Management does not appear to view the preferreds, converts, common ATM, and BTC position as separate financing buckets. It views them as coordinated levers. The quarter's educational value is not just in the numbers reported, but in how openly the company described the operating logic of the machine.

Where These Instruments Sit in Traditional Markets

Demand is strongest in STRC, but the spreads still say credit risk

Once the quarter's internal logic was clear, we asked how these instruments compare with traditional markets. The first answer was that demand is strongest in STRC, but the pricing still says credit risk rather than something Treasury-like.

The clearest demand signal is STRC: year-to-date 2026, all $5.6 billion of preferred ATM issuance came through that one series. Retail ownership is roughly 80%, and daily liquidity rose from $54-120 million in January to $360 million in April. Management says STRC turnover is 10 times that of Wells Fargo preferred.

The cross-section also matters. STRK carries an 8.00% fixed coupon, has returned -7.79%, and saw a -41.98% max drawdown. STRF carries a 10.00% fixed coupon, returned +23.18%, and had a -21.76% drawdown. STRD carries a 10.00% fixed coupon, returned +2.92%, and had a -29.09% drawdown. STRC, now at an 11.50% variable rate, returned +22.52% with only a -4.02% max drawdown.

But the yield and spread comparisons keep the framing honest. Versus PFF's typical roughly 6% distribution yield, MSTR preferreds run about 4 to 7 percentage points wider. Versus today's 2.79 percentage-point spread over Treasuries for high-yield corporate credit, they price 2 to 4 times wider than high-yield corporate credit.

STRF looks Treasury-adjacent but is not a Treasury substitute

We wanted to see whether any of the preferreds behaves like a Treasury substitute. STRF was the closest candidate, and the answer turned out to be subtler than we expected.

Within the preferred stack, it is the most senior preferred, cumulative, meaning missed dividends accrue and must be paid before common dividends resume, fixed at a 10.00% coupon, has no conversion feature, and no ordinary call. It also trades closest to par, at $100.55 latest and $105.58 on November 10, and delivered the best realized total return of the four at +23.18%.

The limits are just as important. STRF's peak-to-trough drawdown was -21.76% over 37 weeks, which is not compatible with literal "no-risk" language. Its spread versus the US 10-year at the November 15 anchor was +5.33 percentage points, firmly in high-yield-credit territory by spread. And structurally, it is subordinated to $8.25 billion of senior debt plus all subsidiary liabilities.

The right comparison from the findings is therefore not Treasury substitute. It is "treasury-spread fixed-coupon perpetual." That sounds like a narrower distinction than it is. STRF may be the most bond-like product in the stack, but the evidence still places it much closer to long-duration high-yield risk than to Treasury cash-equivalent behavior.

Strategy is already large enough to matter in the markets it touches

We then asked whether Strategy is actually large enough to influence the markets it touches, or whether the disruption framing is still mostly rhetorical. The research came back with a fairly clear answer: by management's own market-share figures and by the market-microstructure signals, it is already large enough to matter.

By management's figures, Strategy's share of US capital-markets issuance rose from 8% in 2025 to 10% in 2026 year-to-date.

Inside that, the preferred-equity figure is the eye-catching one: 60% of the US preferred new-issue market, alongside 6% of common-equity issuance. Since the Bitcoin pivot, cumulative issuance is estimated at $81.75 billion. The headline figure is the one worth keeping in mind.

The market-microstructure evidence lines up with the issuance share. STRC daily liquidity rose from $54-120 million in January to $360 million in April, and management says turnover is 10 times that of Wells Fargo preferred. STRC is also said to be the #2 holding in BlackRock's PFF.

The direct-pricing signal remains the cleanest expression of that influence. STRC has held its $99-101 trading band 100% of the time since the ATM was anchored there, and management raised the coupon from 9.00% to 11.25% to 11.50% instead of letting the price slip during BTC drawdowns. The broader preferred-market impact is not fully verified, but the instrument-level influence is already material.

Implications

The research points to a simple but important conclusion: Strategy deserves attention now less because it owns a lot of Bitcoin and more because it is testing whether Bitcoin can support an enduring securitization layer across common equity, preferred equity, and eventually a simplified post-convert capital stack. For readers tracking capital markets, the relevant signal is not just BTC sensitivity. It is product acceptance. STRC's scale, liquidity growth, ETF penetration, and price-band mechanics suggest that at least one instrument has already crossed from concept into functioning market object. At the same time, the spreads, drawdowns, subordination, and the company's tax framing for preferred dividends suggest caution in how the products are interpreted. This is a live capital-markets innovation, not a cash-equivalent revolution. The interesting question the research leaves us with is not whether the products exist. It is whether demand remains durable enough for the issuance machine to keep compounding without a major break in the stack's risk pricing.

What to Watch

What the findings suggest is worth watching next is straightforward:

Whether STRC continues to hold the $99-101 trading band after the proposed move to semi-monthly dividends; that is the cleanest test of whether the product-design tweaks are still improving liquidity and price stability.
Whether preferred issuance remains concentrated in STRC or broadens again to STRF, STRD, or STRK; Q1's $5.6 billion preferred ATM being entirely STRC is a strong but narrow demand signal.
Whether management actually reduces the $8.21 billion convertible stack over coming quarters; the stated destination is common plus preferred plus USD reserve, so convert retirement is the key execution test.
Whether STRC retains meaningful benchmark-style demand, especially its stated position as the #2 holding in BlackRock's PFF; sustained ETF and retail absorption matters more than one quarter of issuance volume.
Whether BTC accumulation keeps tracking the stated 1 million BTC in 36 months goal without forcing a visible deterioration in pricing across the preferred stack, particularly given STRF's high-yield-like spread profile and the broader subordination beneath $8.25 billion of senior debt.

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Strategy Is Building a Bitcoin Credit Market