QS Research · Michael Burry's Scion Capital analyst template · 2006
Strategy Inc (MSTR)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case 0% · downside -24% · upside +27%
At $127.72 the stock trades at 0.99x the $55.44B book value, so the market is pricing MSTR at its bitcoin-heavy balance sheet, not at operating earnings. The software business has no moat and no positive earnings base: TTM to Sep 30 2026 EBIT is -$19.34B, net income to common is -$14.89B, and free cash flow is -$11.1M, while reported profits/losses are bitcoin marks rather than operating cash earnings. The balance sheet and digital-credit repair are real—$5.07B of USD Assets and 3.4 years of dividend/interest coverage—but they are funded by continuous equity/preferred issuance and now bitcoin sales, with BTC Yield at (3.7)% YTD 2026. My base is 0.99x book (~$127.72, 0.0%); downside 0.75x book gives $97.14 (-23.9% vs $127.72); upside 1.25x book gives $161.90 (+26.8%), so the rule is not met either way. I call this a watch: the balance-sheet anchor and credit catalysts could form a mispricing, but today there is no margin of safety and no operating earnings base to capitalize.
Key numbers
- Share price: $127.72
- Market cap: $54.67B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $495.1M
- Price / book: 0.99x
The 15 boxes
- ✓ 1. Long-form business notes
Strategy Inc changed its name from MicroStrategy Incorporated on Aug 11, 2025 and now describes itself as the world's first and largest Bitcoin Treasury Company, with an AI-powered enterprise analytics software business alongside bitcoin treasury operations. The FY2020 10-K framed the company as an analytics software vendor pursuing two strategies, software growth plus bitcoin acquisition; by FY2025 the balance sheet and capital structure are dominated by bitcoin and digital-credit preferred stock. FY2025 revenue was $477.2M and gross profit $327.8M, but operating income was -$5.44B and net income -$4.23B. As of Feb 13, 2026 it held 717,131 bitcoin acquired for $54.5B at an average $76,027, versus a $68,734 market price.
- ✓ 2. Competitive advantage
Strategy has no durable operating moat in its software business: it sells one analytics platform into a market it describes as highly competitive against IBM, Microsoft, Oracle, Salesforce and SAP, and gross profit has fallen from $389.7M (FY2020) to $327.8M (FY2025) while revenue was flat ($480.7M to $477.2M) and operating income was negative in every year FY2020-FY2025. Whatever advantage exists sits on the balance sheet, not the P&L: it calls itself the largest corporate bitcoin holder (717,131 BTC, average cost $76,027 versus a $68,734 market price on 2026-02-13) and it has built a five-class preferred 'digital credit' funding structure backed by a $2.25B USD Reserve. But that advantage is bought with continuous issuance - diluted shares went from 9.68M (FY2020) to 277.66M (FY2025) - and dividends are expected to be paid from proceeds of further securities sales.
- ✓ 3. 10-Q takeaways
The latest 10-Q, for the quarter ended 2026-09-30, shows a Q3 2026 digital-asset gain of $20.91 billion after a nine-month 2026 digital-asset loss of $1.86 billion, with 847,666 BTC held at 9/30/2026. Capital activity was heavy: Q3 2026 class A ATM sales raised $5.41 billion net, while bitcoin purchases were $588.1 million and bitcoin sales funded preferred dividends and STRC repurchases. BTC Yield turned negative, and the software business continues shifting from on-premise licenses to cloud subscriptions with expected declines in license and support revenue.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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