Strategy stock (MSTR) tumbled 17% on Thursday before taking another 1% hit after-hours following the release of its fourth quarter earnings.
The software company led by Michael Saylor pioneered the model for companies to hoard bitcoin in corporate treasuries. These days, it’s seen as an investment proxy for bitcoin, with that side of the business becoming its organizing principle.
The gambit seemed to work last year when bitcoin advanced higher and higher on hopes of easier regulation. But as the sell-off in bitcoin intensified on Thursday, it highlighted the risks in Strategy’s long-term holding strategy that could make it harder for the company to raise capital.
Strategy currently holds 713,502 bitcoins with an average purchase price of $76,052. On Thursday, bitcoin’s spot price fell to around $63,000, bringing the company’s unrealized losses to about $8.9 billion.
“HODL,” Saylor tweeted on Thursday, referring to a tongue-in-cheek term in the crypto community that has evolved to mean “hold on for dear life.”
For the fourth quarter, Strategy reported an operating loss of $17.4 billion, compared to an operating loss of $1 billion in Q4 2024.
It also reported a net loss of $12.4 billion, or $42.93 per share, well below the $5.5 billion loss to $6.3 billion profit range the company indicated in December, when it slashed its forecast from a net profit of $24 billion. The Street was expecting a loss of $20.99 per share.
In the software operations, revenue increased 1.9% year over year to $123 million, driven by strong growth in product licenses and subscription services.
In December, Strategy also created a US dollar reserve worth $2.25 billion, which the company said provides more than two and a half years of funds to cover its dividend. Remarking on the reserve, CFO Andrew Kang said that “Strategy’s capital structure is stronger and more resilient today than ever before.”
Listen to Strategy’s earnings call live on the stock quote page.
