Why did Strategy report a large net loss in the second quarter of 2026?

The net loss was driven by an unrealized loss on digital assets of $8.32 billion, which resulted in an operating loss of $8.33 billion. The filing notes that bitcoin's market price declined during the period, and under ASU 2023-08 such changes in fair value flow through net income.

How is Strategy funding its preferred stock dividends?

The filing indicates dividends are funded through several sources: proceeds from preferred stock and common stock ATM sales, bitcoin sales ($218.4 million year to date under the BTC Monetization Program), and the USD Reserve, which stood at $3.75 billion. Preferred dividends payable on the balance sheet were $155.2 million as of June 30, 2026.

What is Strategy doing to support the STRC preferred stock price?

The company raised the STRC dividend rate to 12.00% and said it will keep that rate until STRC shows sustained trading near $100 per share. It also intends to repurchase STRC when it trades below $100, buying more at deeper discounts and tapering as it approaches par. From July 20 to July 26, 2026, it repurchased 288,930 shares for about $25.0 million.

How did the company's debt and liquidity change?

Convertible notes outstanding fell from $8.21 billion to $6.71 billion after the May 2026 repurchase of $1.50 billion principal. Cash and cash equivalents were $1.71 billion as of June 30, 2026, down from $2.21 billion as of March 31, 2026, and short-term investments were $736.1 million.

Will the preferred dividends be taxed as ordinary income?

Strategy believes it will not have accumulated earnings and profits for U.S. federal income tax purposes and does not expect to generate current earnings and profits. On that basis, it expects distributions on its preferred equity to be treated as non-taxable return of capital for the foreseeable future, though it notes this expectation may change and shareholders should consult their own tax advisors.

Strategy 8-K SEC Disclosure

01—Abstract

Summary

Summary of the 8-K/A filed July 31, 2026. Cited figures are marked; the original filing is the authoritative source.

Strategy Inc reported a second-quarter 2026 net loss of $8.22 billion^a, or $24.45 per diluted share, compared with net income of $10.02 billion in the year-earlier quarter.

The loss was driven by an unrealized loss on digital assets of $8.32 billion^b, which produced an operating loss of $8.33 billion. Total revenues were $122.4 million, up 6.9% year over year, and gross profit was $81.6 million. Net loss attributable to common stockholders was $8.62 billion after $400.7 million of preferred stock dividends.

As of July 26, 2026, the company held approximately 843,775 bitcoin, with an original cost basis of $63.69 billion^c and a market value of $54.77 billion, and described itself as the largest institutional holder of bitcoin. The company's financing activity centered on its preferred stock. STRC issuances raised $7.53 billion year to date, and ATM proceeds totaled $8.41 billion in the second quarter and a further $1.28 billion from July 1 to July 26.

The company reduced its convertible notes outstanding from $8.21 billion to $6.71 billion^d through a May 2026 repurchase of $1.50 billion principal for about $1.38 billion in cash. It raised the STRC dividend rate to 12.00% and said it intends to repurchase STRC below $100 per share, with 288,930 shares bought at an average of $86.53 from July 20 to July 26. The USD Reserve stood at $3.75 billion, covering about 2.1 years of preferred dividends and interest, and the company sold $218.4 million of bitcoin year to date to fund part of its preferred dividends.

Management introduced new metrics, including BTC Hurdle ARR of 10.8%, which it described as the current effective cost of credit, and Net Bitcoin Per Share. The company also changed how it calculates interim-period BTC Yield, BTC Gain and BTC $ Gain, effective January 1, 2026, making those interim figures not directly comparable to prior reports. Investors should weigh the large unrealized losses and the reliance on preferred issuance and bitcoin sales to fund dividends.

02—Key points

Key Highlights

Q2 2026 net loss of $8.22 billion ($24.45 per diluted share) versus net income of $10.02 billion in Q2 2025, driven by an $8.32 billion unrealized loss on digital assets.
Net loss attributable to common stockholders was $8.62 billion, including $400.7 million of preferred stock dividends.
Holdings of approximately 843,775 bitcoin as of July 26, 2026, with an average cost per bitcoin of about $75,476 versus a market price of about $64,915.
Raised $8.41 billion through ATM programs in Q2 2026 and $1.28 billion from July 1 to July 26, 2026, with STRC issuance of $7.53 billion year to date.
Cut convertible debt from $8.21 billion to $6.71 billion by repurchasing $1.50 billion principal for about $1.38 billion in cash in May 2026.
USD Reserve grown to $3.75 billion, covering about 2.1 years of preferred dividends and interest; STRC dividend rate raised to 12.00%.
Launched a $1.0 billion digital credit securities repurchase program with $25.0 million of STRC repurchased at an average of $86.53, and a $1.0 billion MSTR repurchase program with no repurchases to date.

03—Questions

Frequently Asked Questions

Why did Strategy report a large net loss in the second quarter of 2026?
The net loss was driven by an unrealized loss on digital assets of $8.32 billion, which resulted in an operating loss of $8.33 billion. The filing notes that bitcoin's market price declined during the period, and under ASU 2023-08 such changes in fair value flow through net income.
How is Strategy funding its preferred stock dividends?
The filing indicates dividends are funded through several sources: proceeds from preferred stock and common stock ATM sales, bitcoin sales ($218.4 million year to date under the BTC Monetization Program), and the USD Reserve, which stood at $3.75 billion. Preferred dividends payable on the balance sheet were $155.2 million as of June 30, 2026.
What is Strategy doing to support the STRC preferred stock price?
The company raised the STRC dividend rate to 12.00% and said it will keep that rate until STRC shows sustained trading near $100 per share. It also intends to repurchase STRC when it trades below $100, buying more at deeper discounts and tapering as it approaches par. From July 20 to July 26, 2026, it repurchased 288,930 shares for about $25.0 million.
How did the company's debt and liquidity change?
Convertible notes outstanding fell from $8.21 billion to $6.71 billion after the May 2026 repurchase of $1.50 billion principal. Cash and cash equivalents were $1.71 billion as of June 30, 2026, down from $2.21 billion as of March 31, 2026, and short-term investments were $736.1 million.
Will the preferred dividends be taxed as ordinary income?
Strategy believes it will not have accumulated earnings and profits for U.S. federal income tax purposes and does not expect to generate current earnings and profits. On that basis, it expects distributions on its preferred equity to be treated as non-taxable return of capital for the foreseeable future, though it notes this expectation may change and shareholders should consult their own tax advisors.

04—Continue

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