MSTR (Strategy Inc.) — Risk Report

Scope: dependency analysis. This report analyzes Strategy as an upstream issuer for STRC, STRCx, and downstream-asset holders (apxUSD, apyUSD, sUSDat, etc.). It is NOT an equity investment analysis of MSTR common stock. No buy or sell guidance on MSTR is intended or implied. MSTR-vs-spot-ETF comparisons, convert-strike arithmetic, dividend-discount comparisons, and peer DAT analysis are out of scope. The score axes describe Strategy’s upstream solvency posture for downstream holders, not its attractiveness as an equity allocation.

Moderate-high risk · 4.5/10 | Listed: NASDAQ: MSTR | Issuer-level dependency analysis

MSTR is the common stock of Strategy Inc. (formerly MicroStrategy), the publicly listed treasury company holding 848,250 Bitcoin (10-11) on its balance sheet — a stack that declined for the first time in the record in the 06-29→07-05 week, when Strategy sold 3,588 BTC to fund preferred dividends, but has since resumed growing. Strategy’s legacy enterprise-software business is operationally immaterial; the entire investment thesis and risk profile is the BTC stack + the capital-structure machinery that funds the dividends on a growing preferred-stock obligation.

This report is the issuer-level analysis that Strategy’s preferred-stock holders (STRC, STRF, STRD, STRK) and any DeFi assets dependent on those preferreds (STRCx wrapper, apxUSD / apyUSD reserves, sUSDat backing) need to understand. It is NOT an equity-investment recommendation on MSTR common — that would require a different analytical lens (peer comparison vs IBIT spot ETF, conversion math, dividend-discount-model alternatives). The scope here is dependency analysis: how solvent is Strategy as an issuer, what drives the funding model, what’s the runway, what could break.

Holdings	Funding model	USD Reserve (restricted)	Preferred outstanding	Convert debt
848,250 BTC (10-11; +250 in the latest disclosure)	125,183 MSTR shares sold for $21.0M; no preferred issuance	$4.88B (10-11, unchanged) ⚠️ not general cash, which fell to $640.5M	$15.5B	$6.7B

⚠️ Source caveat: Strategy’s issuer release dated 2026-10-12 covers the 10-05→10-11 week and is the source for this refresh. At the time checked, EDGAR’s CIK feed still ended at the October 5 8-K. This report therefore cites no October 12 EDGAR accession and does not imply one has posted.

Bitcoin rose slightly while common dilution continued. Strategy bought 250 BTC for $21.5M, taking holdings 848,000 → 848,250 BTC, and sold 125,183 MSTR shares for $21.0M. No preferred stock was issued and no MSTR common was repurchased.

The STRC bid continued near par: Strategy repurchased 1,932,145 STRC shares for $192.4M, about $99.58/share. $354.8M remains under the digital-credit repurchase authorization. That is demonstrated support, but still a discretionary and finite bid rather than a floor, put, redemption right, or peg.

⚠️ USD Reserve held at $4.88B, but unrestricted USD Cash fell $833.4M → $640.5M. The nearest live trigger is USD Cash below $500M, now only $140.5M away. Scores hold: Balance 5.0 / Funding 4.0 / Refinancing 4.5 / Governance 4.5 / Overall 4.5.

Live monitoring of mNAV regime, balance sheet, capital structure, per-share BTC NAV trajectory, and SEC 8-K event log is on the live MSTR dashboard — values in this report are point-in-time anchors; the dashboard reflects current readings.

What Strategy actually is

A levered Bitcoin bet wrapped in a public-company shell. Strategy adopted Bitcoin as its primary treasury asset in August 2020 under the direction of Executive Chairman Michael Saylor. Since then it has accumulated BTC through three funding sources, in roughly this evolution:

1. Common equity issuance via at-the-market (ATM) programs — works when MSTR trades at a premium to its underlying BTC NAV (mNAV > 1), dilutes per-share BTC NAV when mNAV < 1
2. Senior convertible notes — 0% to 2.25% coupon debt that converts to MSTR shares at strike prices well above current MSTR levels. Cheap leverage, but bullet maturities create refinancing walls.
3. Variable-rate perpetual preferred stock (STRC since mid-2025) — 11.5% perpetual dividend, no maturity, the “all-weather” funding source because demand doesn’t depend on MSTR-equity NAV multiples.

The legacy software business (BI tools, on-premise + cloud analytics) generates roughly break-even cash flow. Treat software cash flow as zero for risk-analysis purposes — the entire financial story is BTC + capital markets.

Governance is concentrated. Saylor holds majority voting control via a dual-class share structure. There’s effectively no risk of activist intervention, and no realistic risk of shareholder-vote-driven strategic shift. But there’s also no external check on his decisions — the 2026-05-05 pivot to BTC sales for preferred dividend funding (see below) happened on a single executive call. Future strategic shifts can happen with similar speed and similar lack of external check.

The mNAV mechanism — the binding signal

How STRC now defends its value — a discretionary soft floor, not a rate-ratchet par defense. The 06-29 framework explicitly states Strategy “will not necessarily increase the STRC dividend rate solely because STRC trades below its stated amount.” STRC’s old reflex — if STRC drifts below ~$95 par, hike the dividend until buyers return at $100 — is gone. In its place Strategy may instead defend STRC by buying it back (the $1.0B program, STRC first priority, funded by selling bitcoin) or by drawing the $2.55B reserve. That is a discretionary soft floor under the price, not a peg: downside is genuinely cushioned, but there is no contractual floor, no put, and no commitment to return STRC to $100 — and the buyback bid appears precisely because STRC is cheap (accretive). This report originally added “then fades as it nears par,” and four weeks of filings say otherwise — repurchases ran $25.0M → $81.2M → $108.6M → $132.2M while the implied price rose $86.53 → $95.20, so the bid accelerated into the recovery rather than fading. Whether the price rose because of the bid is not established, but a holder should not expect the support to withdraw itself as par approaches; on the evidence so far it has done the opposite. Two things now make this mechanism heavier than when it was first described: the buyback has been used at scale rather than merely authorised, and the rate ratchet has been forward-disclaimed until STRC trades sustainably near $100 — so the buyback and the reserve are carrying the defence alone. ⚠️ But the funding source is no longer what the June framework described. It read “the funding is observed to be Bitcoin sales, not merely permitted to be” — true of the 2026-08-10 filing and false of the 2026-08-17 one, in which no Bitcoin was sold and $132.2M of repurchases came from common-stock issuance. That changes which constraint binds: the gate is now the market’s appetite for common issuance, watched through mNAV, rather than the depth of the Bitcoin stack. The flip is recorded at the top of this report, which is the body-rots-under-a-fresh-box failure this report flags elsewhere. For downstream holders, mark STRC to its market price with that soft floor beneath it, not to a par recovery. This reframes the STRC/STRCx/apxUSD/apyUSD reports consistently.

The single most important number for understanding Strategy is mNAV — Strategy’s own published metric, visible on the strategy.com landing page:

mNAV = Enterprise Value ÷ BTC Reserve
EV   = MSTR market cap + senior convertible debt + perpetual preferred − cash

As of 2026-06-03 (strategy.com): EV ≈ $67.2B, BTC Reserve ≈ $55.3B, mNAV ≈ 1.21 — premium. Update 2026-06-26: the late-June selloff (MSTR to 52-week lows, BTC ~$61.3K, STRC to ~$76) has compressed mNAV from ~1.05 (pre-market) to ~1.02 — into PARITY. At parity ATM equity issuance is no longer reliably accretive — the compounding engine is roughly neutral. This is the regime crossing the prior pass was watching for, and it drove this pass’s Funding / Refinancing / Overall cuts. A durable bounce back above ~1.05 would revert them.

A note on mNAV: MktCap / BTC ≈ 0.86 is a useful leverage indicator for the common claim, but it is not Strategy’s published mNAV and it is not the ATM-accretion test. With $22B of senior claims (debt + preferred) sitting ahead of common, MktCap/BTC being mechanically less than 1 is normal capital-structure arithmetic — it would only equal mNAV in a debt-free pure-BTC structure (a spot ETF).

mNAV range (EV/BTC)	Regime	What it means
> 1.05	Premium (current)	ATM equity issuance accretive — every $1 raised buys $1 of BTC that accrues to common above the senior wedge. Per-share BTC NAV grows on each issuance. BTC-bid flywheel intact.
0.95 - 1.05	Parity	Marginal — ATM neither accretive nor dilutive in per-share BTC terms.
0.85 - 0.95	Discount	ATM dilutive to per-share BTC. BTC-accumulation funding leg compressed.
< 0.85	Distress	Funding model under acute stress.

Why mNAV would matter if it inverted: the Strategy investment thesis is centrally a per-share BTC NAV compounding story. If mNAV ever sustains < 1, the compounding mechanism inverts — new equity issuance dilutes per-share BTC NAV rather than growing it. That self-reinforcing loop (weaker thesis → weaker equity → lower mNAV) is the forward stress case to monitor; it is not the operating regime as of 2026-06-03.

The 2026-05-05 disclosure — funding-mix optimization

On Strategy’s Q1 2026 earnings call (2026-05-05), Saylor publicly committed for the first time to using BTC sales as one funding leg for preferred-dividend obligations. He stated current annual preferred payments require selling ~18,500-19,000 BTC per year (~2.2% of the 843K BTC stack) if funded entirely from the stack.

The disclosure was a funding-mix decision, not a forced response to a broken ATM. Annual preferred dividend obligation is ~$1.7B. Funding that via incremental ATM at MSTR ≈ $130 requires issuing ~13M new shares per year (~4% basic-float dilution annually); funding via BTC sales requires liquidating ~26K BTC/yr (~3% of stack annually). Both are economically feasible at mNAV ≈ 1.21. Saylor’s preference is a mix — ATM for liability management plus opportunistic BTC sales for dividend service — rather than open-ended ATM dilution. The “pivot” is a portfolio choice between two viable funding legs, not an admission that the equity-issuance leg is closed.

For preferred holders (STRC, STRF, etc.): Strategy now operates a three-leg funding stack — ATM equity issuance, ongoing preferred issuance, and opportunistic BTC sales. Phase 1 is the USD Reserve — ⚠️ the restricted balance the filings describe as “intended to support the payment of dividends on Strategy’s preferred stock and interest on its outstanding indebtedness”, and not the same thing as general cash — which has built from $871M (5/25) → $1.0B → $1.1B → $1.4B (06-21) → about $2.55B (06-28) → $3.0B (07-12) → $3.225B (07-19) → $3.75B (07-26) → $4.0B (08-02) → $4.65B (08-09) → a record $4.80B (08-16), under the 06-29 framework’s 12-month-minimum reserve policy. That eases Phase-1 coverage to about 37 months at the current obligation, and about 54 months on STRC alone, with zero issuance refill — on the $5.04B reserve at 09-20 against a derived ~$1.625B annual preferred obligation (the 10-Q’s preferences with STRC par reduced for 11,732,792 shares repurchased; see What to watch), rather than the ~$1.728B pre-buyback figure, which overstated the burden. ⚠️ But the funding mix changed: the three flat-BTC weeks ended, and Strategy sold 3,328 BTC across 07-27→08-09, with August proceeds funding STRC buybacks rather than only dividends. The buffer is building even as STRC’s price sits below par; that is the key offset to the late-June drawdown, and it is why this stays instrument-price stress rather than a regime change. The same framework’s $1.0B STRC-priority buyback is now live and accelerating: cumulatively 3,741,813 STRC shares for $347.0M, leaving $653.0M available. Phase 2 is the BTC stack itself — about 31 years of runway at flat BTC and flat preferred outstanding, now with BTC sales formally authorized to fund dividends/reserve/buybacks. The three-leg structure is more robust than a single-leg model would be; residual stress vectors are STRC issuance demand absorption, rate-ceiling headroom, and a future mNAV inversion under sustained BTC weakness.

From 2026-06-30, STRC pays its dividend twice a month instead of once, and the July rate is confirmed at 12.00% (+50bp, the locked hike). The payout is split into two semi-monthly payments (approved at the June 8 annual meeting; first semi-monthly payment July 15, 2026). Note the rate-setting logic itself changed on 06-29: under the revised dividend policy the rate is no longer a reflexive sub-par ratchet — Strategy evaluates it across a basket of factors and explicitly “will not necessarily increase the STRC dividend rate solely because STRC trades below its stated amount.” The dividend is now one tool among several (alongside the reserve, the STRC buyback, and BTC monetization) — see the soft-floor reframe above.

The 2026-05-26 transaction — the new playbook in action

Two weeks after the Saylor pivot, Strategy executed a paradigm transaction (2026-05-11 to 2026-05-25):

• Repurchased $1.50B face of 0% 2029 convertible notes for ~$1.38B cash (8% discount to par)
• Funded by cash reserves + MSTR ATM + STRC ATM
• Zero BTC sales for this transaction
• Result: convert debt $8.2B → $6.7B; total preferred notional grew by $5.7B (mostly new STRC); BTC holdings unchanged

Why Strategy did this:

1. Captured the 8% discount (~$120M of free economic value retiring face below par)
2. Reduced conversion overhang on 2029 notes (eliminates future per-share BTC NAV dilution if MSTR ever rallies above the conversion strike)
3. Maturity-wall management (defends the bigger 2030 maturity wall for later)

Why it’s structurally negative for preferred holders: Strategy traded $1.5B of near-term cash exposure for ~$345-575M/yr in perpetual cash obligation (the new STRC tranches at 11.5%). At any reasonable discount rate, that’s ~$5-8B in present-value terms given up to gain ~$1.6B in present-value terms. The trade only makes sense if STRC issuance is treated as “free” — i.e., the dividend can be perpetually rolled by issuing more STRC. That’s the Ponzi-structure risk explicit in the new regime.

Why MSTR equity reacted -7.9% on the news: Markets read the transaction as net negative for common holders despite Strategy’s positive framing (“BTC Gain of 4,391 BTC, $333M BTC $ Gain”). The convert buyback pressured liquidity, and the new STRC issuance added permanent obligation. Market vote on Saylor’s framing: not buying it.

Capital structure and the 2028 put wall

⚠️ The convert wall is 2028, not 2030. Both were wrong, and wrong in the safe direction on the axis this section scores. Figures below are read from Strategy’s Q2 2026 Form 10-Q (filed 2026-08-03, accession 0001050446-26-000044, Notes 6 and 10). A 10-Q is unaudited — reviewed, not audited — which matters on a report scoped entirely to issuer solvency.

Preferred stack, at aggregate liquidation preference as of 2026-06-30:

$10.489B  STRC  (12.00% variable, semi-monthly)   <- dominant
 $1.402B  STRK  (8% convertible)
 $1.402B  STRD  (10% fixed)
 $1.284B  STRF  (10% fixed perpetual)
 $0.884B  STRE  (10%, EUR 100 stated amount, Luxembourg SE)
--------
$15.462B  total preferred
 $6.714B  Senior Convertible Notes (six tranches, 2028-2032 maturities)

STRC has since been reduced by buybacks: roughly $8.90B of par at 2026-10-11 on a derived 88,954,899 shares (the 06-08 dashboard count less 15,940,101 issuer-disclosed cumulative repurchases), against the $10.489B above.

Common equity is roughly $37B, on 384,225,751 shares (364,585,501 class A plus 19,640,250 class B, per the 10-Q cover at 2026-07-24, plus about 13.1M issued under the August ATMs) against a market price near $119.25 (2026-08-23). That class-A-plus-class-B basis is the one used for mNAV throughout this report, not the 401.3M assumed-diluted count the 10-Q uses for its own per-share Bitcoin metrics.

STRE deserves a flag of its own. It is euro-denominated with a EUR 100 stated amount, so part of Strategy’s preferred obligation carries an FX leg that this report has never discussed and does not attempt to size here.

The wall is 2028, not 2030 — because every tranche carries a holder put

Each convertible tranche gives holders a noncontingent right to require Strategy to repurchase the notes for cash at 100% of principal, on a date well before stated maturity — in the 10-Q’s words, a “noncontingent right to require the Company to repurchase for cash all or any portion of their respective notes at a repurchase price equal to 100% of the principal amount.” Noncontingent. Cash. Par. ⚠️ The holder puts, not the maturities, are what set the binding schedule.

tranche	maturity	principal	conversion price	holder put date
2028	2028-09-15	$1,010.0M	$183.19	2027-09-15
2029	2029-12-01	$1,500.0M	$672.40	2028-06-01
2030A	2030-03-15	$800.0M	$149.77	2028-09-15
2030B	2030-03-01	$2,000.0M	$433.43	2028-03-01
2031	2031-03-15	$603.75M	$232.72	2028-09-15
2032	2032-06-15	$800.0M	$204.33	2029-06-15
		$6,713.75M

That places $4.90B inside calendar 2028 and $5.91B — 88% of the stack — puttable by 2028-09-15, with the first $1.01B falling due about 13 months out, in September 2027.

And the put is the rational path, not a tail case. The lowest conversion price in the stack is $149.77; MSTR was $119.25 on 2026-08-23, so even the cheapest strike sits about 26% above spot, and the rest range to more than 5x it. Every tranche is out of the money. Absent a rally of more than 26% sustained into 2028 — and far more for the other five — holders take par in cash and the notes never reach their stated maturities. A 26% gap is thin enough to cut both ways: one strong quarter changes which schedule binds, so treat it as a figure to re-check rather than assume.

So the March 2030 wall is not the dominant single-year exposure it looks like — it does not exist in the scenario assumed here. Both 2030 tranches are puttable in 2028. If MSTR stays below $149.77 they are gone by then; if it clears $433.43 the 2030B converts to equity instead. The only world in which $2.8B cash-settles in March 2030 requires MSTR to sit between the strikes for two years and every holder to decline a free par put in 2028 — which no rational holder does when the conversion option is worthless.

Keep the size of this in proportion. Capacity is not the constraint: roughly $21.7B of MSTR ATM capacity remains, $17.5B of STRC capacity, and the stack is 846,000 BTC (09-20). Cost and timing are. The reserve is $5.04B (09-20) but policy-committed to a 12-month forward coverage minimum against a derived annual obligation of about $1.625B (see What to watch), leaving about $3.4B genuinely free — and drawing that to meet a convert put attacks the same coverage story holding the preferred axes up. Converts can also be rolled into new converts rather than repaid, which Strategy has done at scale before. This is a worse position than the report described, not a distressed one.

The 5/26 transaction is the playbook for handling this: retire near-term maturities at discount using ATM + new preferred issuance. The 2030 wall will face the same playbook ~12-18 months ahead of March 2030. Whether the playbook still works at that point depends on (a) STRC issuance demand remaining absorptive, (b) the rate-ceiling headroom not being exhausted, and (c) MSTR ATM still being functional.

How Strategy reports its progress — the BTC metrics

Strategy publishes three custom metrics:

• BTC Yield = BTC count growth ÷ share count growth (per-share BTC NAV change %)
• BTC Gain = BTC count equivalent of any accretive-to-per-share transaction
• BTC $ Gain = USD value of BTC Gain

For the 2026-05-26 transaction: BTC Yield 0.7%, BTC Gain 4,391 BTC, BTC $ Gain $333M. Strategy didn’t actually gain 4,391 BTC — the count was unchanged. The framing communicates that the transaction was “equivalent to gaining 4,391 BTC per share” because of conversion-overhang elimination + discount capture.

Useful but somewhat self-serving framing. It ignores the perpetual STRC obligation cost that funded the trade. Read with awareness of this bias.

Score breakdown — issuer-entity axes

These are scores for Strategy as an issuer entity affecting downstream-asset (preferred, wrapper) analysis, NOT for MSTR as a potential equity investment.

Dimension	Score	Notes
Balance sheet quality	5.0	Held (cut from 5.5 in the June 2026 drawdown). BTC stack ~$51.9B at ~$61.3K spot; cost-basis ($75,651/BTC avg) deeper underwater at 52-week-low MSTR. But the cash buffer built to ≈$1.4B (06-21) — the largest weekly build in the series — lifting coverage to ≈9.8 months against the ~$1.5B+/yr preferred dividend service. Buffer building into the stress is the offset; cash alone still covers under a year, and debt + preferred remain meaningful ($22B+ combined). Quality is BTC-correlated; this week the issuer’s near-term position arguably improved, so the axis holds.
Funding model durability	4.0	The machine that pays the preferred dividends is no longer refilling itself. This axis scores whether the funding loop closes. Through 09-13 the USD Reserve printed $5.10B flat for four weeks, and the 08-24 filing shows why: $300.0M of common-ATM proceeds were “used to increase the USD Reserve” — a closed loop, not stillness. With the common ATM idle for three filings, nothing refilled it, and the 09-21 filing prints both limbs of the re-arm condition set on 2026-09-08 — the reserve falling while buybacks continue: the reserve fell $5.10B → $5.04B, drawn $57.4M “to fund the payment of dividends on its preferred stock and interest on its outstanding indebtedness” (the first such sentence in any filing), while $174.0M of STRC was repurchased in the same week. The cut is about the direction of the flow, not the size of the draw: $57.4M is 1.1% of the reserve, one payment week is not a run rate, and $5.04B still covers roughly three years of the preferred obligation. Held to a single notch because the idle issuance legs are plausibly choice rather than inability — $17.5B of STRC capacity is untapped and the $1.0B MSTR buyback authorisation has never been drawn — and because the balance sheet did not weaken: the BTC stack grew this week and STRC recovered toward par. The shape of the funding weakened; the balance sheet did not. Earlier history on this axis: cut from 5.0 at the June 2026 mNAV parity crossing, when the equity-ATM leg stopped being reliably accretive; a durable mNAV bounce above ~1.05 was the stated reversion condition and it has not occurred.
Refinancing capacity	4.5	Both refi legs weaken at parity. Demonstrated capacity to retire $1.5B converts at discount (5/26 transaction) shows the rolling-refinancing playbook works at scale, but at parity the two legs that fund it weaken together: the accretive-ATM leg is now neutral, and the fresh-STRC-near-par leg is impaired with STRC at an all-time low. The 2030-wall-via-STRC assumption is a notch less safe. The reserve build extending runway is the offset that caps this to one notch. A durable bounce back above ~1.05 mNAV reverts this. Cut again to 4.5 on 2026-08-23 — a recalibration on a corrected fact, not a deterioration. The wall this axis was scored against is wrong: holder puts make $5.91B puttable for cash at par by 2028-09-15, not $2.7B maturing in 2030, so the exposure is about 18 months nearer and roughly 1.75x larger than the rationale above assumed. Nothing about Strategy changed — the puts have been in every 10-Q since issuance and only our reading of them changed. One notch rather than more because the first put is still about 13 months out, ATM and STRC capacity are ample, the reserve is at a record and building, and converts can be refinanced rather than repaid.
Governance	4.5	Saylor majority voting via dual-class. Strength (consistent BTC thesis) AND single-point-of-decision risk (the 5/05 pivot was a unilateral call reshaping the company’s risk profile). Held — no new governance event.
Overall	4.5	Held through the 2026-10-12 issuer release. BTC holdings rose to 848,250 and the restricted Reserve held at $4.88B, but USD Cash fell to $640.5M as the near-par STRC buyback continued. The nearest trigger—USD Cash below $500M—is now $140.5M away. Functional and levered, with a finite but demonstrated STRC bid; acceptable as an upstream dependency only when sized accordingly.

How to use this analysis

• Preferred-stock holders (STRC, STRCx, downstream) who want to understand the upstream issuer’s solvency mechanics
• DeFi investors with STRC-dependent positions (apxUSD, apyUSD, sUSDat, STRCx) who want the upstream view rather than only the wrapper-side analysis
• Researchers tracking the Digital Asset Treasury company category — Strategy is the canonical example, and the framework here transfers to peer DAT issuers (MetaPlanet, etc.)

What this analysis does NOT cover

• Equity-investment analysis of MSTR common. Peer comparison versus spot BTC ETFs (IBIT, FBTC), convert-strike arithmetic at maturity, and dividend-discount-model alternatives are out of scope; those require an equity-research framework.
• Personal-portfolio sizing for MSTR common. This dependency analysis does not produce buy or sell signals.
• Bitcoin-exposure substitution analysis. Spot ETFs are the relevant simple-BTC products, but comparing them with MSTR is not covered by this report.
• Saylor governance as a personal-risk gate. His voting concentration is relevant here as a structural issuer fact, not as individualized investment guidance.

What to watch

Each of these signals has a live panel on the MSTR dashboard (and most also on the STRC dashboard for the preferred-side view):

• mNAV (EV/BTC, currently about 0.98 — just below parity). This is the live signal. ⚠️ Updated: mNAV read 1.0101 on 2026-08-23 — back above the 1.0 line, after printing roughly 0.97 to 0.99 through July and early August. That is the line where ATM equity issuance stops being accretive, so crossing back above it restores the funding flywheel. The re-arm tracker shows zero of the three sub-1.0 weekly prints the downgrade trigger requires, with the reserve up for a sixth week. MSTR was $119.25 at that read; the $96.5 figure quoted in the update box is the ATM-implied average for the 08-16 filing week, not a current price. Part of the latest compression reflects the cash reserve growing to a record $3.75B, because cash is deducted from enterprise value. This is a watch, not a break: the cut re-arms only on a sustained sub-1.0 with the reserve drawing down, and the reserve is instead building — so marks hold. A durable bounce back above about 1.05 reverts the 06-26 parity notch; a sustained sub-1.0 with reserve drawdown re-arms the cut; sustained below 0.85 = distress. Use strategy.com’s landing-page mNAV as the authoritative reading.
• BTC price and Strategy’s BTC count. Weekly purchase/sale cadence; the first at-scale BTC sale (3,588 BTC in the 06-29→07-05 week) has now executed — regime confirmation is behind us, so the signal shifts to the pace of ongoing sales versus reserve refills.
• Per-share BTC NAV trajectory. The headline equity metric. Compresses with dilution (ATM issuance) even when BTC count grows.
• STRC outstanding tranche cadence. $10.489B at 2026-06-30 (Q2 10-Q, aggregate liquidation preference), and roughly $8.90B at 10-11 after a derived 15,940,101 shares were retired by buybacks. Preferred issuance remains zero, so the live risk is currently the opposite: the buyback is shrinking STRC while consuming cash.
• Aggregate-preferred runway. Currently ~31 years; meaningful compression below 30 years.
• BTC-sale window date. About 37 months of total-preferred coverage at zero issuance refill, and about 55 months on STRC alone—the $4.88B reserve at 10-11 against a derived annual obligation of about $1.574B (STRC about $1.067B at 12.00% on 88,954,899 shares, plus STRF, STRE, STRK and STRD at the 10-Q’s preferences). The STRC count is derived, not disclosed. Drift inward to within about 3 months = acute short-term stress.
• ⚠️ USD Reserve is not USD Cash. Reserve held at $4.88B, while Cash fell $833.4M → $640.5M. The below-$500M trigger is now $140.5M away. Do not merge the pockets.
• BTC count (848,250 as of 10-11). The latest 250 BTC cost $21.5M. Strategy sold 125,183 common shares for $21.0M; preferred issuance remained zero.
• STRC buyback execution. The latest disclosure records 1,932,145 shares for $192.4M at about $99.58, leaving $354.8M under the digital-credit authorization. The near-par execution demonstrates the bid remains active, but the authorization and USD Cash are finite; this is still not a contractual floor, put, redemption right, or peg.
• ✅ RESOLVED — the August STRC rate was HELD at 12.00% (announced 2026-07-31), as this report flagged was possible. Management will not recommend a change until STRC trades sustainably at or near $100, so the rate leg is forward-disclaimed and the defence now rests on the buyback and the reserve. The live question becomes whether that policy survives a renewed STRC slide. Formerly: the revised late-June policy lets Strategy hold at 12.00% instead and defend STRC via the now-live buyback and reserve. A hold remains a real possibility.
• ⚠️ The 2028 put wall, not the 2030 maturity wall. The first noncontingent holder put is 2027-09-15 ($1.01B), followed by $2.0B on 2028-03-01, $1.5B on 2028-06-01 and $1.4B on 2028-09-15. Markets will start pricing the cash-versus-conversion outcome roughly 12-18 months ahead of each — so from around mid-2026 for the first tranche, which is now. The single number that decides it is MSTR against $149.77, the lowest strike in the stack.
• Saylor governance events. Voting structure changes, succession plans, health events — material risk vectors.

Related reports

• STRC + STRCx retail report — the variable-rate perpetual preferred that is Strategy’s primary funding instrument, and Backed Finance’s on-chain wrapper. The most direct retail exposure to Strategy’s preferred-dividend stream.
• apxUSD report — Apyx’s $1 stablecoin backed partly by STRC family (~30-40% of reserves).
• apyUSD report — Apyx’s yield-bearing sibling, captures the STRC dividend stream as NAV growth.
• sUSDat retail report — Saturn’s yield wrapper, ~81% backed by raw STRC at steady state.

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Revision history: 2026-08-24 — funding source changed; no score change. The 2026-08-17 filing shows no Bitcoin sold and $132.2M of STRC repurchases funded from common-stock issuance, against the 08-10 filing in which sales funded them. The binding constraint moves from the depth of the Bitcoin stack to the market’s appetite for common issuance, watched through mNAV. 2026-08-23 — Refinancing capacity 5.0 → 4.5; Overall held at 4.5. Every convertible tranche carries a noncontingent holder put at 100% of principal in cash well before stated maturity: $4.90B is puttable inside calendar 2028 and $5.91B — 88% of the $6.71B stack — by 2028-09-15, with the first $1.01B in September 2027. The convert wall is 2028, not 2030. Every tranche is out of the money — lowest conversion price $149.77 against MSTR at $119.25 — so the puts are the rational path rather than a tail case. Capital structure restated from the Q2 Form 10-Q (unaudited): STRC $10.489B, semi-monthly at 12.00%; STRK plus STRD $2.804B; STRE $0.884B, euro-denominated and carrying an FX leg; strikes $149.77–$672.40. Common equity about $37B on 384,225,751 shares. 2026-08-23 — Bitcoin sales became a pattern, not a one-off: sales in two of three weeks (1,638 and 1,690 BTC, 843,775 → 840,447), and the purpose changed — July sales funded dividends, August sales funded discretionary STRC buybacks. Buybacks ran $25.0M → $81.2M → $108.6M → $132.2M as the implied price rose $86.53 → $95.20. The August STRC rate held at 12.00%, forward-disclaimed until STRC trades sustainably near $100. Reserve $3.75B → $4.80B across three record weeks; buyback remaining $653.0M; coverage about 33 months total and 38 on STRC alone. mNAV 1.0101 at 2026-08-23, back above break-even after a month below. 2026-07-27 — first STRC buyback of about $25M, record $3.75B reserve, third flat-BTC week under a par-conditioned pause, STRC about $88.90; marks held.

Revision history

2026-10-13 (issuer release dated 2026-10-12, period 10-05→10-11) — scores held; USD Cash is $140.5M above the nearest trigger. Strategy bought 250 BTC for $21.5M, taking holdings to 848,250 BTC; sold 125,183 MSTR shares for $21.0M; and repurchased 1,932,145 STRC shares for $192.4M. USD Reserve held at $4.88B, USD Cash fell $833.4M → $640.5M, and $354.8M remains under the DCS repurchase authorization. Balance 5.0 / Funding 4.0 / Refinancing 4.5 / Governance 4.5 / Overall 4.5 all held. ⚠️ Source discipline: the issuer release is live, but EDGAR’s CIK feed still ended at the October 5 8-K when checked; no October 12 accession is cited.

2026-09-22 (weekly 8-K, period 09-14→09-20, accession 0001193125-26-396093, read at source from EDGAR) — first USD Reserve decline; bitcoin buying resumed from cash; Funding model durability 4.5 → 4.0, Overall held at 4.5.

• USD Reserve $5.10B → $5.04B, the first decline in the series, with the filing stating $57.4M of the reserve was used to pay preferred dividends and interest — the first reserve-draw sentence in any weekly filing. A first observed net draw, not a run rate.
• 950 BTC bought for $75.7M (~$79,670) from USD Cash, ending a three-week halt; holdings 846,000, aggregate cost $63.80B, average $75,416 (nudged up: the purchase was above cost basis).
• STRC buyback: 1,771,238 shares for $174.0M at ~$98.24 (1.76% below par), sixth consecutive week and highest price yet; STRF/STRK/STRD/MSTR zero; $875.1M remains under the $2.0B digital-credit programme; $1.0B untouched under the MSTR programme.
• USD Cash $1.30B → $1.05B ($249.7M out, nothing in); combined Reserve + Cash $6.40B → $6.09B, the largest weekly decline of the series. Common ATM zero for a third filing; preferred issuance zero in all 17 weekly filings since 2026-05-26, against ~$17.5B of STRC capacity that has never moved.
• Preferred obligation restated downward, and the prior figure overstated the burden. STRC par is about $9.32B at 09-20 (derived: 104,895,000 shares less 11,732,792 repurchased), so the annual preferred obligation is about $1.625B, not the $1.728B computed on the 10-Q’s pre-buyback $10.489B — about 6.5% lower. Coverage on the $5.04B reserve is about 37 months total and 54 on STRC alone, against the 33 and 38 previously shown. Free reserve above the 12-month policy floor is about $3.4B.
• Funding 4.5 → 4.0. The re-arm condition set on 09-08 — the reserve falling while buybacks continue — printed on this filing: $57.4M drawn from the reserve for dividends and interest in the same week as $174.0M of STRC repurchases, with nothing refilling the reserve since the common ATM went idle. One notch, not more: the draw is 1.1% of the reserve, one week is not a run rate, the idle legs may be choice, and the balance sheet did not weaken. Balance 5.0 / Refinancing 4.5 / Governance 4.5 unchanged; Overall held at 4.5, and moves to 4.0 on USD Cash below $500M, a second consecutive reserve decline, or a zero-buyback week.

2026-08-17 (weekly 8-Ks, periods 07-27→08-16) — Bitcoin selling resumed and is now funding STRC buybacks; marks HELD (Overall 4.5). Read at source from EDGAR (CIK 1050446), accessions 0001193125-26-329565, -341297 and -353240.

• Sales in two of the next three weeks. 1,638 BTC (07-27→08-02, avg $63,957) and 1,690 BTC (08-03→08-09, avg $64,262), none in the week to 08-16. The stack went 843,775 → 840,447, a net 3,328 BTC across the gap. The sales are small — about 0.4% of the stack — price-opportunistic, and inside the Board-authorized monetization program. Selling is a run-rate hypothesis rather than a one-off, on three weeks of evidence.
• ⚠️ The sharper change is what the sales are FOR. In July, Bitcoin was sold to fund dividends — an obligation. In August it funded buybacks of Strategy’s own preferred. Of $104.73M in sale proceeds in the 07-27→08-02 week, $52.4M went to dividends and $52.3M to STRC repurchases; the following week the 8-K states flatly that the net proceeds of a $108.6M sale went entirely to repurchases of STRC Stock. Strategy is liquidating Bitcoin to support the market price of its own preferred — observed behaviour at scale, two weeks running.
• ⚠️ The buyback accelerated as STRC approached par rather than fading. Across four weeks: $25.0M → $81.2M → $108.6M → $132.2M of repurchases, at implied average prices of $86.53 → $89.03 → $94.27 → $95.20. The bid grew more than 5× while the price rose about 10% toward par. Causality is not established — the buyback may be why the price rose. Cumulative: 3,741,813 STRC shares for $347.0M; $653.0M remains of the $1.0B program.
• The STRC rate was held at 12.00%. Announced 2026-07-31, with management stating it “does not intend to recommend to our board of directors a change from the current 12.00% per annum dividend rate for STRC Stock until STRC Stock demonstrates sustained trading at or near its $100 stated amount.” The rate ratchet is now forward-disclaimed by stated policy, leaving the buyback and the reserve as STRC’s defence.
• Figures refreshed. USD reserve $3.75B → $4.0B → $4.65B → $4.80B across the three weeks, three further records, up $1.05B. STRC recovered to about $95.20, roughly 5% below par rather than 11% — anything marking STRC downstream should be re-checked. MSTR is about $96.5, derived from the weekly ATM tables rather than quoted ($333.7M net on 3,458,866 shares), so treat it as ATM-implied and slightly understated by commission.
• Coverage, recomputed rather than scaled. Against the 10-Q’s liquidation preferences at current rates, the annual preferred obligation is about $1.728B — STRF $1.284B at 10.00%, STRC $10.489B at 12.00%, STRE $0.884B at 10.00%, STRK $1.402B at 8.00%, STRD $1.402B at 10.00%. So the $4.80B reserve at 08-16 was about 33 months of total-preferred coverage, and about 38 months on STRC alone. The 10-Q those preferences come from is unaudited, as quarterly filings are; on an assessment scoped entirely to issuer solvency that qualification matters.
• ⚠️ And the live state is better than the filings alone imply — mNAV has crossed back above break-even. The three 8-Ks above run only to 08-16. The live dashboard, timestamped 2026-08-23, has MSTR at $119.25 and BTC at $76,156 — roughly 24% and 18% above where the last filing week left them, and well above the $64,262 average price at which Strategy sold in the 08-03→08-09 week. mNAV reads 1.0101 — back above the 1.0 line, after printing about 0.97 to 0.99 since early July. The re-arm tracker shows zero of the three required sub-1.0 weekly prints, with reserve direction up for a sixth week. This belongs beside the BTC-selling finding because the two point in opposite directions: the sales resumed, while the condition that would trigger a downgrade — sustained sub-1.0 with the reserve drawing down — is further from being met than at any point in this series. The $96.5 MSTR figure above is the ATM-implied average for the 08-16 week and is not the current price.
• No score change. Balance 5.0 / Funding 4.5 / Refinancing 5.0 / Governance 4.5 / Overall 4.5 all hold. The sales are small and opportunistic, the reserve set three more records, the rate held, and the mNAV trigger — sustained sub-1.0 with the reserve drawing down — is not met, because the reserve did the opposite again.

2026-07-27 (weekly 8-K, period 07-20→07-26) — first STRC buyback, record $3.75B cash reserve, a third straight week with no Bitcoin sold; marks HELD (Overall 4.5). Strategy used its June $1.0B program for the first time, repurchasing 288,930 STRC shares for about $25.0M at roughly $86.50 each, below the $100 face value; about $975M remains. The soft floor moved from promised to actually used, though it remains a discretionary issuer bid rather than a contractual floor or put. The preferred-dividend cash cushion reached another record, $3.75B (up $525M), or roughly 25 to 26 months of total-preferred coverage and 34 months on STRC alone.

• Dividend funding stayed clean. Preferred dividends were paid without selling Bitcoin for a third consecutive week, leaving the stack flat at 843,775 BTC. Common-stock issuance roughly doubled to about $544M, while preferred issuance stayed at zero for a ninth week. Management said it will not buy more Bitcoin until STRC returns to $100, making the pause a deliberate STRC-support choice rather than a sign of funding trouble.
• mNAV remained just below break-even at about 0.98, partly because the larger cash reserve reduces enterprise value; this was not stock weakness, as MSTR rose to about $97.58. STRC recovered to about $88.90, roughly 11% below par. Marks hold (Balance 5.0 / Funding 4.5 / Refinancing 5.0 / Governance 4.5 / Overall 4.5).

2026-07-20 (weekly 8-K, period 07-13→07-19) — record $3.225B cash reserve, a second straight week with no Bitcoin sold, mNAV just below break-even; marks HELD (Overall 4.5). The cash cushion that pays Strategy’s preferred dividends hit another record at $3.225B (from $3.0B, up $225M) — a third consecutive weekly build, roughly 22 months of total-preferred coverage (roughly 30 months on STRC alone), about 10 months of slack above the Board’s 12-month-minimum floor. Preferred dividends were paid without selling any Bitcoin for the second week running, with the stack flat at 843,775 BTC. Funding came from common stock issuance at about half the prior week’s pace ($263.5M vs $466.7M) at an essentially flat share price near $96 — an eighth consecutive week of zero preferred issuance, and no buybacks.

• mNAV sat just below the break-even line, at roughly 0.99 (07-17 close), with MSTR about flat week-over-week at $94.85 after the prior week’s 8% drop failed to continue. The trigger logic: a sub-1.0 mNAV only re-arms a cut if it is sustained with the reserve drawing down, and the reserve is doing the opposite. Marks hold (Balance 5.0 / Funding 4.5 / Refinancing 5.0 / Governance 4.5 / Overall 4.5).
• STRC softened to $85.29, about 14.7% below par, still well above its late-June low near $76 — see the STRC/STRCx report. The soft floor under STRC continues to be reinforced and cash-funded (a discretionary issuer bid plus a record reserve, still not a contractual par guarantee).

2026-07-13 (weekly 8-K, period 07-06→07-12) — record $3.0B cash reserve, common ATM resumed, no Bitcoin sold; mNAV slipped back below 1.0; marks HELD (Overall 4.5). (1) The cash cushion for preferred dividends hit a record $3.0B (from $2.55B, +$450M) — roughly ~20 months of total-preferred coverage (~28 months on STRC alone), the clearest ability-to-pay reading in the series to that point. (2) Dividends were funded without selling any Bitcoin, and stock issuance restarted — common ATM resumed at $466.7M and the BTC stack held flat at 843,775 (7th straight week of zero preferred issuance, no buybacks).

• MSTR fell 8% w/w (to **$93–95**), pushing mNAV back just below the break-even line (~0.97–0.98). Under the trigger logic a sub-1.0 mNAV only re-arms a cut if it is sustained with the reserve drawing down — and the reserve was building to a record. Marks hold (Balance 5.0 / Funding 4.5 / Refinancing 5.0 / Governance 4.5 / Overall 4.5).
• STRC held ~$87.48 (07-12, about −12.5% to par), still well off its $76 all-time low — see the STRC/STRCx report. The soft floor under STRC is reinforced and cash-funded: a record reserve plus the STRC-priority buyback authorization sit beneath the price (still a discretionary bid, not a contractual par guarantee).

2026-07-06 (weekly 8-K, period 06-29→07-05) — Strategy sold Bitcoin at scale for the first time to fund its preferred dividends; marks HELD (Overall 4.5), prices recovered off the late-June lows. The Bitcoin treasury company that markets itself as never selling Bitcoin started selling it — to pay its dividends. In the week of 06-29→07-05 Strategy sold 3,588 BTC (~$216M) to cover its preferred-stock dividends and top its cash reserve back up, and for the first time in the record its Bitcoin stack fell — from 847,363 → 843,775 BTC. For the five weeks before, it had been buying Bitcoin, funded by issuing common stock.

• Why it matters: the never-sell posture is formally over. The selling is modest and by Strategy’s own Board-authorized “monetization” plan — the BTC Monetization Program armed on 06-29 is live, not a fire sale — but it is a real behavioral shift.
• The other side: the stock recovered. MSTR reclaimed $100 ($101.96), STRC bounced off an all-time low (to ~$87.87, see the STRC/STRCx report), and the cash reserve held at ≈$2.55B (~a year of dividend coverage). This is “starting to use the backstop,” not “running out of options.”
• Marks held. The event was already priced by the late-June cuts and prices recovered off the 06-26 nadir (Balance 5.0 / Funding 4.5 / Refinancing 5.0 / Governance 4.5 / Overall 4.5). (Also this quarter: a Q2 2026 digital-asset loss of $8.32B — unrealized, non-cash; and CFO Andrew Kang added the principal-accounting-officer role after the prior CAO retired.)

2026-06-29 (8-K — “Digital Credit Capital Framework”) — scores HELD (Balance 5.0 / Funding 4.5 / Refinancing 5.0 / Governance 4.5 / Overall 4.5). Over the weekend of 06-28 Strategy’s mNAV (EV/BTC) briefly printed below 1.0 — the point where new common-stock issuance stops adding BTC-per-share. Monday’s 06-29 8-K reversed that: mNAV recovered to ~1.01 (low-parity, back above the 1.0 line) and Strategy disclosed a coordinated funding-resilience package supplying dividend coverage. Five parts, all strengthening preferred-dividend coverage:

• USD cash reserve nearly doubled to ≈$2.55B (06-28) from ≈$1.4B (06-21), under a Board policy to keep a minimum 12 months of forward preferred-dividend + interest coverage on hand. Near-term cash coverage ~17.3 months; the zero-issuance BTC-sale window moves out to ≈2027-12 from ≈2027-04.
• A BTC Monetization Program — Board-authorized BTC sales (up to ~$1.25B into the reserve, plus funding dividends/buybacks). A shift from the never-sell posture: BTC sales for dividend service become a standing authorization. Armed, not yet used — BTC holdings flat at 847,363 and the reserve build funded by common-stock issuance (~$1.15B), not BTC sales.
• Two $1.0B buyback programs — one for the digital-credit preferreds (STRC the explicit first priority, “if accretive”) and one for common stock, both BTC-funded.
• July STRC dividend rate confirmed at 12.00% (+50bp), now paid semi-monthly.
• A revised STRC dividend policy converting STRC’s old par mechanism into a discretionary soft floor. Net read: Strategy funded a near-doubled reserve by diluting common at low-parity mNAV (worse for equity accretion — already reflected in the 06-26 cut) while materially strengthening preferred-dividend coverage (the axis that matters for downstream STRC/apxUSD holders). The held score reflects the second. Low-parity mNAV (~1.01) stays a live watch — a sustained re-break below 1.0 with the reserve drawing down would re-arm the cut.

2026-06-26 — mNAV crossed premium → PARITY; Funding 5.0 → 4.5, Refinancing 5.5 → 5.0, Overall 5.0 → 4.5. STRC fell further to a regular-session ~$76 (a fresh all-time low, about −24% to par) and Strategy’s mNAV (EV/BTC) crossed from premium (~1.05) into PARITY (~1.02). At parity the accretive common-ATM-to-BTC flywheel is roughly neutral, so both the funding engine and the refinancing legs weaken: the ATM-equity leg no longer reliably compounds per-share BTC NAV, and the fresh-STRC-near-par and accretive-ATM refi legs degrade together. Why the cut is capped at one notch: mNAV is at low-parity, not discount/distress (just below the 1.05 boundary), the $1.4B reserve extends runway to ~9.8 months, issuance is paused by choice, not forced (4th consecutive week), and net BTC accumulation continues (+520 BTC → ~847,362 BTC, common ATM only). This is the funding model at its inflection, not broken. Balance sheet 5.0 and Governance 4.5 held. The underlying STRC instrument was cut a further notch in parallel (see STRCx report). Reversion note: a durable mNAV bounce back above ~1.05 reverts these notches. (Prior same-day pass — pre-market: a constructive 8-K (reserve $1.1B → $1.4B, coverage to ~9.8mo) against MSTR at 52-week lows ~$94 and STRC at an all-time low ~$80; mNAV sat right on the ~1.05 floor and scores HELD pending the crossing — which then occurred intraday. Earlier — 2026-06-07: a ~16% BTC drawdown took MSTR about −21% and STRC sub-par to ~$93.40; overall moved 5.5 → 5.0 then, capped at one notch because mNAV stayed premium.)

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