Strategy (MSTR) reported its Q1 2026 earnings on May 5, and as of May 3, it held 818,334 Bitcoin, up 22% year-to-date. The company said the stash had a base cost of $61.81 billion and a market value of $64.14 billion, with an average purchase price of around $75,537 per coin. That huge Bitcoin position caused an unrealized loss of $14.46 billion in the first quarter and raised the net loss to $12.54 billion, or $38.25 per diluted share, much worse than the $4.22 billion loss it posted a year earlier.
Still, Strategy’s preferred stock is becoming a bigger part of the story. The company has made 23 consecutive preferred payments on time and in full, totaling more than $693 million since launching those products in early 2025.
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Its STRC Preferred Stock, Series A Variable Rate Perpetual Stretch Preferred Stock, has grown to $8.5 billion in just nine months, making it the largest preferred stock by market value in the world, with an annualized dividend rate currently set at 11.50% and monthly payments of $0.96 per share. In its first-quarter earnings release, CEO Michael Saylor also said the company plans to ask shareholders to approve a switch to biweekly STRC dividend payments to help improve liquidity and price stability.
With more than $13.5 billion in preferred stock outstanding, Bitcoin continues to lead the numbers and a possible change in dividend payments is on the table. What does Strategy’s first-quarter story really mean for investors who own it?
Inside the numbers
Strategy, formerly MicroStrategy, now runs two businesses at once: its initial enterprise software business and its much larger Bitcoin holding strategy, which now shapes how most investors view the company.
The action shows it clearly. Shares are down 55.95% over the past 52 weeks, but are still up 20.14% year to date as Bitcoin sentiment has improved.
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Even in terms of valuation, Strategy appears unusual, trading at a forward price-to-earnings ratio of 1.37 times compared to the industry average of 24.61 times.
Its STRC preferred stock currently offers an annualized dividend rate of 11.50% and pays $0.96 per share each month, and Strategy has continued to declare and pay, or is willing to pay, those dividends since the start of fiscal 2026.
The first quarter numbers show where the real pressure came from. Revenue rose 11.9% year over year to $124.3 million, while gross profit hit $83.4 million with a margin of 67.1%, suggesting the software side is still holding strong. But that was dwarfed by an operating loss of $14.47 billion, almost all of it tied to an unrealized Bitcoin loss of $14.46 billion. Net loss hit $12.54 billion, or $38.25 per share, while cash fell slightly to $2.21 billion, proving once again that Bitcoin, rather than the core business, is driving reported results.
What drives the story?
On the software side, Strategy used Strategy World 2026 to show where it wants to grow outside of Bitcoin. Chief Product Officer Saurabh Abhyankar spoke about the new features of Strategy Mosaic, the company’s semantic layer for business data. The updates included Model Linking, which helps teams connect data from areas such as sales, finance, and marketing, as well as Mosaic Sentinel, a set of tools for risk checks, anomaly detection, and cost tracking for AI agents. The strategy also added broader support for open standards such as Model Context Protocol and Open Semantic Interchange, with version control based on Git.
At the same time, the story of Strategy’s preferred stock is beginning to transcend its own balance sheet. In February at Strategy World 2026, Prevalon Energy and Anchorage Digital said they had each put some of their corporate treasury into STRC. This is important because it suggests that other institutions may be willing to use Strategy’s preferred stock products, rather than simply watching the company use them for itself.
Still, Bitcoin is the main driver. In January, Strategy bought 13,627 BTC for $1.25 billion in its largest purchase since last summer, using money raised through the sale of common stock. As of May 3, Strategy held 818,334 BTC and had posted a 9.4% BTC return and around $4.97 billion in BTC gains so far this year.
Reading Wall Street
For the June 2026 quarter, the average estimate is $65.09, up from $32.60 a year ago, pointing to a year-on-year growth of 99.66%. For the September 2026 quarter, analysts expect $41.08 versus $8.42 last year, or a growth of 387.89%. For all of 2026, the estimate jumps to $136.35 from a loss of $15.23 the year before, equating to projected growth of 995.27%.
However, not all analysts interpret stocks the same way. Cantor Fitzgerald raised his price target on Strategy to $212 from $192 and maintained an “Overweight” rating, helped by stronger Bitcoin prices and better sentiment around the stock.
Canaccord Genuity took the other side, with analyst Joseph Vafi cutting his target by more than 60% after Bitcoin fell below $70,000, saying the drop sharply reduced the value of Strategy’s huge cryptocurrency holdings.
All 18 analysts surveyed rate the strategy as a consensus “Strong Buy,” and the average price target of $360.81 suggests a 94% upside from current levels.
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Conclusion
Strategy’s Q1 story says that if you buy shares today, you’re actually signing up for a leveraged call option on Bitcoin with a growing layer of preferred stock income in action. Earnings optics will continue to swing as long as BTC’s unrealized gains and losses dominate P&Ls, but the STRC platform, the push toward biweekly payments, and early signs of institutional adoption tilt the narrative toward a more revenue-friendly version of this Bitcoin vehicle. If BTC holds firm or rises, I think the path of least resistance for stocks will remain upward over the next year, even if the journey remains extremely volatile.
As of the date of publication, Ebube Jones had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
