According to Woofun AI, Strategy (MSTR.US) disclosed staggering financial figures in its third-quarter 2026 earnings report: operating profit reached $21 billion, marking the highest single-quarter record in the company's history. This massive paper gain is entirely attributable to price fluctuations in its BTC holdings rather than growth in traditional business operations.
Despite the dazzling profit numbers, the market gave negative feedback on its core metric — the amount of BTC corresponding to each share — which declined rather than rose this quarter, revealing the structural contradictions behind its capital operations. A deeper analysis of its financial structure shows that this divergence between profit and holding efficiency stems from U.S. accounting rules that mandate recognition of cryptocurrency valuation changes. Against the backdrop of rising BTC prices this quarter, Strategy recognized $20.91 billion in unrealized gains, driving net income to $19.53 billion, equivalent to earnings per share of $44.75.
However, this accounting "paper wealth" masks the dilution effect. Data compiled by Woofun AI shows that although the company's total BTC holdings grew 26% year-over-year to 848,517 coins, the BTC value per share fell 3.7%, meaning the amount of BTC represented by each share is now even less than in January.
Looking back to July, when BTC prices declined, the same accounting rules caused the company to record a quarterly loss of $8.22 billion, even though BTC per share still rose 4.5% at that time. This dramatic profit volatility highlights how sensitive Strategy's business model is to BTC price movements, while also exposing the dilution pressure created by its strategy of issuing new shares to fund continued BTC accumulation.
To support this massive balance sheet, Strategy raised $21.23 billion in 2026 through new share issuances and other means. Meanwhile, the company sold $431.8 million worth of BTC, using the proceeds to pay dividends and execute its share buyback program. Notably, Strategy spent $2.04 billion in 2026 to repurchase its STRC (STRC.US) preferred shares, which investors can sell for cash while enjoying monthly dividends. The company also established a $5.07 billion reserve, sufficient to cover preferred stock dividends and interest payments for the next 3.4 years.
Chief Executive Officer Phong Le emphasized in the announcement that the company has demonstrated its determination to restore the health of STRC share prices, and announced that preferred shares will pay dividends daily starting November 1. However, because the buyback program was prioritized, the company's weekly BTC purchases plummeted 84% during the first two weeks of October. Additionally, management changes are underway, with Chief Financial Officer Andrew Kang set to depart on November 5, and operations head Reza Virasteh scheduled to take over on January 1.
Market reaction did not turn optimistic despite the record profit. Before the earnings release, Strategy's stock had already fallen 2.4% to $141.62; after the report was published, the stock dropped a further 0.8% in after-hours trading. By comparison, BTC prices fluctuated around $90,600 on Thursday evening. Strategy claims it wants to lead the development of the "digital credit" market, but its stock price continues to trade below the corresponding BTC value, causing the BTC value per share to keep declining.
This phenomenon reflects the enormous costs required to sustain its high-leverage, high-dividend business model, as well as investors' concerns about its long-term capital efficiency. This marks a sober reassessment of its "BTC proxy" narrative following multiple dilutive financings.