Strategy Leans On Equity Conversion To Sustain Aggressive Bitcoin Exposure

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• Strategy Inc, NasdaqGS:MSTR, has highlighted its focus on resilience to sharp Bitcoin price declines.

• The company is pursuing a plan to convert about $6b of bond debt into equity as part of its ongoing Bitcoin accumulation approach.

• Management has reiterated its intention to keep adding Bitcoin despite substantial unrealized losses on existing holdings.

Strategy, trading at $133.88, sits at the center of the corporate Bitcoin conversation, with its share price reflecting sharp swings in sentiment around digital assets. The stock has seen a 22.9% decline over the past month and a 14.8% decline year to date, while the 1 year return stands at a 60.4% decline. Even so, its very large 3 year gain and 52.8% 5 year return show how volatile the ride has been for shareholders.

For investors, the recent debt to equity conversion plan and continued Bitcoin accumulation raise fresh questions about dilution risk, balance sheet flexibility, and exposure to crypto price moves. As you assess Strategy, it can help to think about how comfortable you are with this mix of equity funded balance sheet change and a concentrated Bitcoin focus, and whether that aligns with your own risk tolerance and time horizon.

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📰 Beyond the headline: 2 risks and 2 things going right for Strategy that every investor should see.

Strategy is doubling down on its identity as a Bitcoin proxy, and this latest push to convert about US$6b of bond debt into equity sits right at the heart of that choice. Management is effectively trading fixed obligations for a larger equity base that absorbs Bitcoin volatility, while keeping the Bitcoin stack intact. With 714,644 BTC on the balance sheet and a stated stress level around US$8,000 per Bitcoin, the company is leaning on long-dated, low interest convertible notes and perpetual preferred stock to avoid forced selling during downturns. At the same time, the core AI powered analytics software business, which generated US$477.23m of revenue in 2025, is being eclipsed by a full year net loss of US$3,848.15m that is heavily shaped by digital asset swings. For you as an investor, the key question is whether this equity heavy, Bitcoin first model fits your appetite for crypto linked volatility, dilution risk, and reliance on capital markets to refinance rather than liquidate Bitcoin in deep drawdowns.

• ⚠️ Very high exposure to Bitcoin price moves, with net losses of US$12,436.65m in Q4 2025 and US$3,848.15m for 2025 tied to digital asset volatility.

• ⚠️ Shareholders have already faced substantial dilution, and a planned US$6b debt to equity conversion could further weaken existing ownership stakes.

• 🎁 Management highlights staggered debt maturities between 2027 and 2032 and low interest convertible notes, which may reduce near term refinancing pressure.

• 🎁 Strategy remains the largest corporate holder of Bitcoin, positioning the stock as a liquid, regulated way for some investors to gain Bitcoin exposure alongside an AI powered analytics business.

From here, it is worth watching three things closely. First, how quickly the US$6b debt to equity conversion progresses and what that means for total share count. Second, whether management continues to buy Bitcoin during further price weakness, given the already large unrealized loss and recent quarterly loss. Third, how much attention and investment goes into the core analytics software business compared with the Bitcoin treasury, especially as competitors like Palantir, Snowflake and Salesforce push their own AI powered data platforms. Together, these signals can help you judge whether Strategy is evolving into a more balanced software and Bitcoin play, or staying primarily a leveraged Bitcoin vehicle.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MSTR.

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