Microstrategy 10.00% Series A Perpetual Stride Preferred Stock Stock Earnings Reports

Key points for investors:

- Bitcoin treasury and scale: Strategy holds 818,334 BTC (~3.9% of total supply) with an average purchase price ~ $76,000/BTC and market value ~ $64B (May 2026). BTC-per-share has grown to 213,371 (≈18% YoY) and the company has acquired BTC every quarter since 2020 (108 acquisitions). 2026 YTD BTC yield is 9.4%; the company delivered 22.8% BTC yield in 2025.

- Q1 financials: Reported an operating loss of $14.5B and net loss of $12.8B driven primarily by noncash fair-value markdowns of Bitcoin. Digital asset carrying value fell to $51.6B at quarter end (BTC price ~$67.8k). Q2 (to May 1) showed an unrealized gain of ~ $8.3B and additional BTC purchases.

- Capital raising & product traction: Year-to-date 2026 Strategy raised ~$11.7B of capital (≈half common equity, half preferred/Stretch). Stretch (the variable-rate perpetual preferred) has grown quickly to ~$8.5B outstanding, high liquidity (~$375M/day), and an ~11.5% stated dividend yield. Stretch issuance is a key driver of the company’s capital strategy and less dilutive alternative to raising via common equity.

- Balance sheet & leverage: Cash ~$2.2B USD reserve; long-term debt unchanged ~$8.2B; preferred equity increased (~$9–13.5B depending on slide). Net debt about $6B (~9.3% net leverage vs BTC reserve) implying a corporate “BTC rating” ~10.8x (meaning BTC reserves cover net debt ~10.8x). Management highlights that even a hypothetical 91% BTC decline would still cover net debt in stress case.

- Capital allocation framework & optionality: Management articulated a formal decision framework to maximize BTC-per-share (primary goal). They will use combinations of (1) selling common, (2) issuing digital credit (Stretch), (3) holding/using USD reserve, (4) buying/selling BTC and (5) retiring convertible debt. Breakeven mNAV to accretively buy BTC with equity is ~1.22x (not 1.0x). They plan to proactively reduce convertible debt and potentially retire it over time.

- Dividend funding and sustainability: Management showed models where if Bitcoin grows at a modest 2.3% annual rate (breakeven ARR), the BTC reserve alone could fund dividends in perpetuity. They also demonstrated scenarios where Stretch issuance above the breakeven point enables growing BTC reserves even while funding dividends.

- Risk & credit view: Using conservative inputs (10% BTC ARR, 40% vol) the team’s risk model yields a fair credit spread around ~61 bps (investment-grade range). Lower forward BTC volatility materially improves credit metrics and expands possible amplification/leverage.

- Product & market priorities: Management’s near-term priorities are (a) continue scaling Stretch and digital credit, (b) grow BTC-per-share (target: double in 7 years ≈10% annual BTC yield), (c) reduce convertible debt, and (d) consider semi-monthly Stretch dividend payments (proposal to move from monthly to semi-monthly to improve liquidity and reduce reinvestment lag). They stated the long-term goal of a debt-free balance sheet and continued focus on Stretch as the flagship product.

- Governance / shareholder items: A shareholder vote is coming (early June) to amend Stretch to semi-monthly payouts; management asks shareholders to vote.

Overall takeaway: The company remains intensely focused on executing a multi-asset capital markets strategy (equity, preferred/digital credit, and balance sheet management) to increase BTC-per-share. Stretch has rapidly become a material, liquid funding source that provides the firm with significant optionality; management is explicitly willing to be tactical with BTC and other balance-sheet levers to optimize shareholder value, while emphasizing liquidity and risk controls.