Michael Saylor Bets on Moderate Leverage Structure to Sustain "Perpetual" Dividends in the Strategy

Strategy Inc surprised markets in February 2026 with a controversial thesis: its level of operational leverage is not only sustainable but provides a solid foundation for indefinite dividend payments if Bitcoin grows modestly. Michael Saylor, the architect of this digital treasury strategy, presented calculations during the earnings conference that redefine how the market should evaluate the company. Despite a quarter marked by significant accounting turbulence, the core narrative remains: volatility does not invalidate the structure; it tests it.

When Numbers Seem Concerning, But Logic Persists

Q4 2025 was brutal on the books. Strategy reported a $12.6 billion contraction in book value, almost entirely due to Bitcoin price swings. Operating losses reached $17.4 billion, and earnings per share came to -$42.93, a negative deviation of over 1,500% from analyst projections. On February 6, shares plummeted 17.12% in after-hours trading, ending at $119.74.

The timing couldn’t be worse. Bitcoin shrank to $63,596.56 on the same day—a 13% drop in 24 hours, its worst daily performance since June 2022. For the first time since 2023, the company’s Bitcoin holdings fell below their total cost basis.

Still, management remained surprisingly unfazed. According to Le, the organization’s CEO, this sequence of events does not reflect operational weakness but a real-time stress test of a structure designed precisely to withstand such volatility.

The Calculation Behind Saylor’s Claim

The reasoning is pure mathematics, not optimism. Strategy holds approximately $45 billion in Bitcoin (down from $60 billion the previous week due to price movements). Its annual dividend obligations structured in preferred shares total $888 million.

Saylor argued that this Bitcoin reserve alone provides 67 years of dividend coverage if the company chooses to fund payments through gradual BTC sales. Under this logic, Bitcoin only needs to appreciate by about 1.5% annually for the reserve to be preserved while meeting commitments.

The point was taken even further: even in the extreme scenario that Bitcoin never appreciates again, Strategy would have “80 years to solve the problem.” This frankness about adverse scenarios was not an objection but a demonstration of margin of safety.

Leverage Level: Moderate Compared to Peers

Growing market concern has centered on corporate debt. Strategy has $8.2 billion in convertible bonds, resulting in a net debt of $6 billion after cash. At current prices, this represents a leverage ratio of approximately 13%.

To contextualize this metric, management provided benchmarks: AAA-rated investment-grade companies typically operate with an average leverage of around 23%. High-yield BBB entities are near 32%. The tech sector as a whole shows an average leverage of 15.7%. Strategy, by comparison, operates at roughly half the leverage of its investment-grade peers.

The debt structure offers unusual flexibility. The weighted average interest rate is just 42 basis points, maturities are spread between 2027 and 2032, and there are no restrictive covenants limiting future operations. This design provides significant operational room during periods of stress.

Cash Buffer: Stabilizing Dividend Flow

Recognizing short-term volatility risks, Strategy accumulated a cash reserve of $2.25 billion by the end of 2025. According to CFO Andrew Kang, this reserve provides approximately 30 months of dividend coverage without any need to sell Bitcoin. The stated goal was simplicity: dividends should not fluctuate with Bitcoin’s weekly swings, especially during sharp downturns.

This dual structure—Bitcoin reserve for long-term growth, cash for short-term stability—creates a buffer against reactive panic during market volatility events.

The Quiet Software Business

Obscured by headlines of losses, Strategy’s software division delivered a robust quarter. Revenue reached $123 million, beating projections by 3.5%. Subscription services revenue increased 62.1% annually, totaling $51.8 million. Cloud revenue grew 65%. Total annual revenue for 2025 hit $477 million.

This performance underscores a frequently overlooked point: Strategy’s core operational business continues generating consistent cash flow regardless of Bitcoin’s balance sheet behavior. The company does not rely solely on price appreciation for viability—the software business provides a revenue floor.

Bitcoin Holdings at a Historical Scale

As of February 1, 2026, Strategy held 713,502 BTC, acquired at a total cost of $54.26 billion, or approximately $76,052 per unit. This stock represents 3.4% of all Bitcoin that will ever be in circulation at maximum, establishing the company as the world’s largest corporate holder.

In 2025, Strategy’s Bitcoin holdings yielded a 22.8% return, meaning Bitcoin per share grew faster than shareholder dilution. This return fell within the company’s long-term target range of 22% to 26%. The consistency of this metric suggests that the controlled accumulation strategy is working as designed.

Stretch: The Product That Multiplies Leverage

A key pillar of revenue generation is Stretch (STRC), Strategy’s cutting-edge digital credit instrument. Preferred shares trade near their $100 par value and pay an annualized dividend of 11.25%, equivalent to roughly 18% on an adjusted fiscal basis.

Stretch has expanded to $3.4 billion in total volume, trades about $118 million daily, and exhibits approximately 7% volatility—dramatically lower than Bitcoin’s 45% swings. The instrument is collateralized 5.6 times after senior claims, providing robust protection during stress episodes.

Stretch distributions have recently been structured to qualify as return of capital for over a decade, offering significant tax efficiency. Management also refinanced the dividend adjustment mechanism to a monthly VWAP calculation, reducing volatility on record and payment dates.

Seven-Year Per-Share Growth Scenarios

Looking ahead, Strategy outlined three paths to double Bitcoin per share over seven years through continuous digital credit issuance. A conservative scenario assumes a 5% annual return in BTC, leading to a 1.4x increase in value. An intermediate model aims for full doubling. An aggressive approach seeks 2.5x, assuming higher issuance and comparatively lower dividend rates.

Each scenario relies on specific assumptions about market absorption and capital availability, but all share a core premise: Bitcoin will continue to serve as a growth engine while the software business sustains operational cash flows.

The Reality of Extreme Risk

Management did not shy away from worst-case modeling. According to internal analyses, Bitcoin would need to plummet 90%—to around $8,000—before the Bitcoin reserve’s value equals the company’s net debt. Even in this apocalyptic scenario, the company would have several years before major maturities come due, providing time for restructuring, capital raising, or refinancing.

This transparency offers calibration: debt is not an existential risk unless a Bitcoin catastrophe occurs—an almost impossible event under fundamental technical assumptions.

Capitalization and Determination Context

In 2025, Strategy raised $25.3 billion in capital, cementing its position as the largest equity issuer among U.S. public companies for the second consecutive year. In January 2026, despite challenging market conditions, it raised an additional $3.9 billion and acquired 41,002 BTC.

These figures reveal a management team that not only speaks conviction but acts on it—buying when others sell, maintaining capital structure despite short-term pressures.

Summary: Built for Durability

The conference call made clear that the Bitcoin treasury model is not short-term speculation but a long-term value creation machine designed to operate through severe volatility cycles. The 13% operational leverage ratio positions the company comfortably relative to corporate peers.

If Bitcoin grows even modestly—1.25% annually or more—the reserve is preserved, and dividends continue indefinitely. If Bitcoin remains flat, cash reserves and the software business fund payments. If Bitcoin drops sharply, there are still years before existential pressure hits.

Saylor appears confident he’s right; the numbers suggest he might be, and the pace of capitalization shows many investors agree. The real test will come over the next cycles.