Can Strategy's balance sheet progress offset its Q2 earnings risk?

When will Strategy report its latest earnings?

Strategy will report second-quarter (Q2) 2026 results on Friday, 31 July at 6.00am AEST, after the United States (US) market close.

Q1 2026 recap: $14.5 billion operating loss on Bitcoin's mark-to-market decline

Strategy's first quarter (Q1) 2026 report showed a $14.5 billion operating loss and a $12.8 billion net loss, driven almost entirely by the mark-to-market decline in Bitcoin's (BTC) valuation. Revenue from the company's software business grew 11.9% to $124.3 million, but this was dwarfed by the scale of the BTC-related losses.

Management directed investors' attention towards alternative metrics. Bitcoin per share rose 18% year-on-year (YoY) through early May, while the year-to-date (YTD) BTC yield – the rate at which Strategy's Bitcoin holdings grow relative to its share count – stood at 9.4% over the same period. Executives argued these accretion metrics, rather than earnings calculated under generally accepted accounting principles (GAAP), represent the true measure of the business. They also pointed to a shift in capital issuance towards the STRC digital credit instrument, and away from common stock, as the year's biggest achievement, framing it as protection for existing common shareholders against dilution.

Q2 preview: consensus points to a swing back to profit, but downside surprise is likely

Q2 operating income is projected to swing back into positive territory at $3.86 billion, following two consecutive quarters of steep losses, according to consensus estimates on London Stock Exchange Group (LSEG). However, that forecast rests on the views of just seven analysts, two of whom submitted their estimates in early May – before Bitcoin's sharp June decline. BTC closed the quarter lower than where it started, falling from around $68,100 at the end of Q1 to about $59,100 by 30 June.

More tellingly, the accretion metrics that management asked investors to focus on in place of GAAP losses have also deteriorated. YTD BTC yield fell to 5.8% as of 21 July, while the growth rate of Bitcoin per share decelerated to 8% YoY. The argument that GAAP losses are immaterial so long as the accretion engine is running well no longer holds up. Investors should be prepared for the possibility of a significant downside surprise relative to consensus – on both the metrics Wall Street tracks and the ones management prefers.

Strategy's latest financial metrics

Why mNAV matters: Strategy's valuation ratio drops below 1.0x for the first time

Strategy's stock has traded as a leveraged Bitcoin proxy for years because its market capitalisation sat at a premium to the Bitcoin backing it, allowing the company to issue shares above that value and buy more Bitcoin – growing Bitcoin-per-share for existing holders even as the share count rose. That model only holds when mNAV – the metric Strategy uses to frame its own valuation, calculated by dividing enterprise value by its BTC reserve – sits above 1.0x. Management has indicated the true breakeven level is closer to 1.22x once debt and preferred stock commitments are factored in; below that threshold, every new share sold destroys value rather than creating it. In late June, mNAV touched roughly 0.99x, its first-ever sub-parity reading, before recovering to the current 1.03x level.

The declining mNAV trend reflects growing investor scepticism over whether this model remains intact, and over Strategy's ability to balance shareholder and creditor interests against its liquidity needs should Bitcoin's bear market persist. It also helps explain why MSTR shares are down 33% YTD – a steeper decline than Bitcoin's own 24% drop over the same period.

'Never sell' meets its limit: the Bitcoin Monetization Program

On the Q1 call, co-founder Michael Saylor said Strategy would 'probably sell some Bitcoin to fund a dividend just to inoculate the market', explicitly retiring the 'never sell' stance he had previously advocated. That is exactly what followed: the company has sold 3620 BTC since May and announced a 'Bitcoin Monetization Program' authorising up to $1.25 billion in further sales to fund the USD Reserve, preferred dividends and share buybacks.

The key question is whether recent progress on Strategy's balance sheet under the new framework can be sustained: net leverage has fallen from roughly 9% in May to about 6% today, and the USD Reserve has grown to $3.225 billion, up from $2.25 billion as of the Q1 call. If this deleveraging trend proves real and sustainable, it could mark a turning point for Strategy. Investors may regain confidence in the company's ability to service its debt obligations, which could help re-rate its mNAV.

MSTR outlook: neutral Smart Score contradicts Wall Street's strong buy consensus

TipRanks' Smart Score – a composite of eight data sets including technical momentum, hedge fund activity and return on equity – rates MSTR 4 out of 10, squarely neutral. This sits in tension with traditional analyst coverage: 13 of 14 analysts rate the stock a 'buy', with a 'strong buy' consensus and a 12-month price target of $275.46, implying 175.4% upside from its 22 July close.

The gap is telling: quantitative, backward-looking factors – weak momentum and negative return on equity among them – score MSTR poorly, while sell-side analysts remain focused on the long-term Bitcoin thesis and largely unmoved by the challenges of recent months.

TipRanks insights

MSTR technical analysis: consolidation below the 200-day moving average

The bearish trend that has dominated Strategy's share price since last July looks set to continue for as long as the stock trades below its 200-day moving average (MA). The stock has fallen 72% since its October 2025 high of $365.21, underperforming Bitcoin's 48% decline over the same period.

Having found support near $81 in June, the stock is currently trading sideways near its 20-day MA. Immediate resistance sits at the 50-day MA near $124.5, while the local low of $81 should provide immediate support.

Strategy daily price chart

• _{Source: TradingView. The figures stated are as of 23 July 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}