Strategy, formerly known as MicroStrategy, reported an $8.22 billion net loss for the second quarter of 2026, driven almost entirely by an $8.32 billion unrealized markdown on its Bitcoin holdings. Despite the steep loss, MSTR shares closed at $97.74, gaining 4.73% during the regular U.S. trading session, and held near that level in extended trading after the earnings release.

Many investors still search for the company's shares using the term "MicroStrategy stock."

$8.22 Billion Quarterly Loss

Strategy posted an $8.33 billion operating loss for the quarter ending June 30, 2026, a sharp swing from high operating income in the same period a year earlier. A digital asset impairment loss of $8.32 billion accounted for nearly all of the operating decline.

The company recorded a net loss of $8.22 billion, or $24.45 per diluted common share. Preferred stock dividends of $400.7 million increased the total loss attributable to common shareholders to $8.62 billion.

Bitcoin's second-quarter price decline reduced the reported value of Strategy's substantial digital asset portfolio. The company ended June holding 846,000 BTC before sales reduced the position to 843,775 BTC by July 26. Strategy listed the original acquisition cost of those holdings at $63.69 billion, with a market value of $54.77 billion as of that date. The Bitcoin position still grew 25% during 2026, and the year-to-date BTC yield reached 4.5%.

Software Revenue Grows Alongside Accounting Loss

MSTR stock rose in part because the company reported growth in its core software business. Quarterly revenue reached $122.4 million, up 6.9% from $114.5 million in the year-ago quarter. Gross profit increased to $81.6 million, though gross margin narrowed to 66.6% from 68.8%.

Cash and cash equivalents stood at $1.71 billion at quarter-end, with an additional $736.1 million in short-term investments.

The share price gain did not eliminate the risks tied to Bitcoin price fluctuations. Strategy employs fair-value accounting, meaning quarterly changes in cryptocurrency valuations can produce large gains or losses on its financial statements. The company's average Bitcoin purchase price was approximately $75,476, while Bitcoin traded near $64,915 on July 27, 2026.

Dollar Reserve Bolsters Preferred Dividend Coverage

Strategy increased its U.S. dollar reserve to $3.75 billion after facing investor questions about preferred dividend sustainability and debt servicing costs. Management stated the reserve can cover existing preferred dividend and interest obligations for more than 2.1 years. The company has completed 18 consecutive months of dividend payments without interruption.

Strategy raised the dividend rate on its STRC preferred shares to 12% to support trading near the $100 stated value. The reserve provides additional flexibility when Bitcoin trades below the company's average acquisition cost.

During 2026 through July 26, Strategy raised $17.06 billion through at-the-market (ATM) equity programs. The company also repurchased $1.5 billion in face value of convertible notes for approximately $1.38 billion, reducing outstanding convertible debt to $6.71 billion. The discounted repurchase lowered total debt and reduced potential share dilution from future note conversions.

Capital Allocation Policy Shifts

Strategy sold approximately $218.4 million in Bitcoin during 2026 to help fund preferred stock dividends. The company sold 1,363 BTC for $80.8 million in late June, followed by another 2,225 BTC for $135.2 million during the first five days of July. These sales represented a notable departure from the company's previous practice of retaining every Bitcoin it purchased.

Management indicated it will continue selling Bitcoin when market conditions are favorable for funding reserves, dividend payments, interest costs, or security repurchases. Future capital raises will no longer flow entirely into Bitcoin purchases. Instead, Strategy will split proceeds between Bitcoin acquisitions and cash reserves based on liquidity requirements and market conditions.

Management said it currently rejects Bitcoin-backed borrowing due to counterparty and margin risks that could pressure the balance sheet.

Strategy also introduced a $1 billion MSTR common stock repurchase program, though no common shares had been repurchased as of July 26. Separately, the company spent $25 million repurchasing 288,930 STRC preferred shares below their $100 stated value. Management plans further STRC repurchases while the security trades below par, with approximately $975 million remaining under the preferred security repurchase authorization.